India is a 1.3-billion-person anomaly. As a whole, the country is doing exceptionally well. It is the fastest growing major economy in the world, and is catching up with wealthier nations with impressive speed. Yet over the last several decades, defying economic theory, the Indian states with the strongest development are those that were already best off.
Recent Developments India’s Widening Regional Divide
(For Gujarat, Haryana, Kerala and Punjab the average of previous five years of growth rate has been used for 2017-18 due to the absence of data. (Source NAS data)) India in Bottom 15 of Oxfam Index on Efforts to Reduce Inequality India fared poorly, ranking 147 out of 157 countries, in terms of its commitment to reducing inequality, while Denmark topped the list. The index ranks 157 countries on their policies on social spending, tax, and labour rights.
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Regional Inequality
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Regional inequality is a disparity between the standards of living applying within a nation. It is difficult to quantify the prosperity or poverty of a region, but there are two basic indicators. The first is unemployment and the second indicator is per capita income. Other factors indicating disparity include the type of industry and its growth or decline, numbers of young people in further education, housing standards, and the quality of the environment. Some would assert that economic development brings about regional inequality.
Gadgil-Mukherjee Formula
The Gadgil-Mukharjee Formula, which was applied first in the Fourth Plan, has underwent many changes since its inception. The present version, known as National Development Council (NDC) revised Gadgil-Mukherjee Formula 1991, works in two stages:
Special Category States
Government Intervention to Tackle Regional Disparities
Interventions to tackle regional disparities being taken up by the Union Government fall into two categories. The first is to direct investments into less developed States under Centrally Sponsored Scheme (CSS) through more favourable norms for distribution of assistance. For instance, under the Indira Awas Yojana, funds are allocated State-wise based upon the housing shortage and population below the poverty line. However, the second is, intervention of the Central Government for special area development programmes that have a clear focus on some aspect of development in identified backward areas. These programmes are:
Backward Region Grant Fund (BRGF)
Hill Areas Development Programme/Western Ghats Development Programme (HADP/WGDP)
Border Area Development Programme (BADP)
Educational Development in Special Category States