Development distances among Indian states- Explained Pointwise

Large development distances among Indian states has been a major challenge for inclusive development in India. While the 1991 structural reforms addressed the policy and regulatory framework at the national level, India needs another set of structural reforms at the state level to reduce the large development gap among the states.

What is the status of Development Distance among Indian states?

Development Distance- There are very large differences in levels of development across Indian states. These differences are larger than those among different countries of Europe. For example- Haryana’s per capita income is five times that of Bihar. Life expectancy in Kerala at 75 years, is ten years longer than 65 years in Uttar Pradesh (UP). Enrolment in higher education is over 51% in Tamil Nadu, compared to less than 15% in Bihar.

What are the factors behind the large Development Distance among Indian states?

1. Historical Factors- The British government and industrialists concentrated their development efforts on regions with significant potential for thriving manufacturing and trade. Thus, the coastal states which included port cities like Bombay, Calcutta and Madras, witnessed disproportionate development as compared to hinterland states.

2. Geographical Factors- The challenging landscape characterized by flood-prone areas, hilly terrain, rivers, and dense forests results in elevated administrative and developmental project costs. Hence, the Himalayan states such as Himachal Pradesh, Northern Kashmir, Uttarakhand, and the North-Eastern states have predominantly lagged behind in development due to their inaccessibility and other inherent challenges.

3. Location Specific Advantages- Due to some locational advantages like availability of irrigation, raw materials, market, port facilities, some regions get special favour in respect of site selections of various developmental projects. For ex- Location of oil refineries in states like Maharashtra, Gujarat.

4. Early Mover Advantage- New investment in private sector has a general tendency to concentrate much on regions with basic infrastructural facilities. Term-lending institutions and commercial banks tend to concentrate investments in the relatively more developed States.

5. Failure of Planning Mechanism- The one size fits all approach, poor implementation of plans, lack of planning capacity at state level have increased the development distance among the states.

6. Restricted Success of Green Revolution- The benefits of the Green revolution was restricted mainly to the states of Punjab and Haryana. The states of Bihar and UP could not reap its benefits.

7. Law and Order Problem- Extremist violence, law and order problem, have all obstructed the flow of investments into backward regions. These have also led to the flight of capital from backward states.

Why is the Development Distance a challenge?

1. Increasing development distance- The development gap between the southern and western states (Tamil Nadu, Karnataka, Kerala) and the BIMARU states (Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Rajasthan, UP and Uttarakhand) is diverging instead of converging, presenting a challenge to inclusive growth.

2. Challenge to the National Unity- The BIMARU states hold a significant demographic sway, accounting for more than 40% of India’s population. This demographic strength translates into a substantial representation of Members of Parliament (MP) in the Lok Sabha, creating a notable political influence. The increasing divide between the economic influence of the developed states and the political influence of the BIMARU states, can lead to the political fragmentation of the country.

3. Social Inequality- Economic disparities contribute to social inequalities, leading to issues such as unequal access to education, healthcare, and basic amenities. Unequal opportunities can exacerbate social divisions based on caste, class, and gender, hindering social harmony.

4. Environmental Concerns- In an effort to catch up, lagging states often undertake unsustainable developmental projects that are not aligned with the carrying capacity of the region. For ex- Hydropower plants and road infrastructure in the ecologically sensitive hilly areas.

How can the Development Distance be turned into an opportunity?

1. Applying the ‘flying geese’ paradigm- Flying geese paradigm refers to the situation where geese following in line learn lessons from the geese ahead in line, culminating in a single leading goose. Hence, the lagging states must learn their lessons from the leader states to culminate India into a single leading goose.

2. Different reform priorities for different states- States need to prioritize reforms in areas where they are lagging. The reforms undertaken must not be prioritized in some overarching sense, but at the level of individual sectors or services, based on comparative advantage.

3. Adoption of location specific targeted action- Location specific targeted action is required in less prosperous regions to ensure a minimum acceptable level of prosperity. For ex- Drought Area Development Programme, Hilly Areas Development Programme.

4. Invigoration of Civil Society- Collaboration with civil society organisations/ NGOs in backward regions to develop social and human capital can also help reduce the development distance between the states.

Large development differences across Indian states pose challenges as well as opportunities. The opportunities must be leveraged to overcome the challenges. State level political leaderships must develop the necessary vision and humility to learn reform lessons from other states.