Economic disparities among Indian states widens amidst growing GDP

Whenever there is great prosperity, there is great inequality,” observed Adam Smith, known as the father of modern economics.

- Tushar K Mahanti

That economic growth exacerbates income inequality is a common theme of discussion in growth theories.

In India, regional imbalance has always been one of the major concerns before policy makers and planners. There is a huge gap between active and vibrant states in terms of availability of facilities and this has resulted in the form of unequal levels of development both in terms of economic and human.

And as Adam Smith professed of greater inequality with higher prosperity, India is experiencing a widening economic inequality among regions with higher economic prosperity. The Indian economy has been experiencing rapid growth in recent years and is now the fastest growing major economy. The economic disparity is impacting balanced development, resource sharing and policy implementation as developed states are attracting more investment and less developed states are struggling to get investors.

While India’s GDP has been growing rapidly in recent years, economic disparities among states and regions are widening suggesting that not all states or regions are benefiting equally from the overall economic progress. Factors contributing to this widening disparity include unequal natural resource distribution, different industrial development levels, and infrastructure gaps, differences in educational attainment and governance and policy differences. The states of western and southern regions are consistently performing better than those of the northern and eastern regions.

Inter-state economic disparity widens