Regional Development and Income Disparities in India: A Sectoral Analysis

Abstract

This paper investigates the pattern of spatial economic disparities in India during the first quarter century of its planned economic development, 1950-51 to 1975-76. Theoretical generalizations about growth and regional economic disparities have been provided in the pioneering works of Gunnar Myrdal, Albert Hirschman, and William Alonso, who have given us the concepts of backwash vis-a'-vis spread effects or of polarization vis-a-vis trickling-down effects.' The major empirical work covering a wide spectrum of countries at different levels of development is the well-known article by Williamson.2 One of the main hypotheses which emerges from these writings, specifically that of Williamson, is that regional economic disparities and the level of national development are linked together broadly in the form of an inverted U-shaped curve. The present paper examines whether the postWorld War II era in India conforms to such empirical generalizations and, if not, why not. Regional economic inequality in India has received attention in about a dozen articles and at least three doctoral dissertations. But their conclusions do not always agree. This is partly because the earlier studies covered a shorter span of time than the 25-year period studied here. Second, the conclusions of earlier writers are sensitive to the initial and terminal time periods chosen. Third, trends in regional disparities differ depending on the use of regional income data at current prices or at constant base-year prices. Earlier studies have mostly made use of current price data, while this study considers both types of data. Fourth, movements in the regional income aggregates reveal only part of the story. An analysis of movements in sectoral disparities provides a deeper insight into the underlying forces generating the observed trends, especially as sectoral movements do not all take place in the same direction.