Infrastructure, Economic Growth and Interstate Disparity in India

Abstract

The Indian economy has been growing in recent years. Though slow growth was once referred to as the ‘Hindu rate of growth’, now India has been moving forward at faster speeds. For the five years from 2002/3 to 2007/8, the real per capita net national product grew annually at around 7 per cent on average. Although growth slowed in 2008/9 due to the global financial crisis triggered by the crash of subprime loans, the economy showed a steady increase and demonstrated its robustness. India’s economic growth rate may not be comparable to China’s, but the ‘big sleeping elephant’ finally awoke and has started trotting. Because of its rapid and relatively stable economic expansion and its population exceeding 1 billion, India has been regarded as one of the promising emerging countries in the global era. Against the background of such high economic growth, however, lies a growing concern over deteriorating income inequality in various spheres: regional disparity — that is, interstate disparity, rural-urban disparity, social class disparity (inequality between Hindu caste and outcaste) and so on. While many studies highlight the widening disparity in India and its negative implication in recent years,1 inequality issues, in fact, are not new to India. Since her independence or even in the pre-Independence era, inequality has topped the agendas of India’s policy-makers. The dilemma facing India now is an old and traditional one, the dilemma between growth and distribution. India’s economic policy has vacillated in the balance between them. Now, in the present context, a further problem is that inequality has been rising despite several attempts to redress it.