A working paper "Relative Economic Performance of Indian States: 1960-61 to 2023-24" by Economic Advisory Council to the Prime Minister (EAC-PM) highlights the uneven growth across Indian states.

Key trends highlighted in working paper

Disparity in Relative Per Capita Income
- Western and Southern regions are outperforming: Delhi, Telangana, Karnataka, and Haryana have the highest per capita income.
  - Delhi’s per capita income is 250.8% of the national average (2.5 times higher).
- Decline of West Bengal: Once 27% above the national average (3rd highest in 1960-61), West Bengal now stands at 83.7% of the national average.
- Improvement in Odisha: Odisha has improved its relative per capita income from 55.8% (2000-01) to 88.5% in 2023-24 of the national average.
Dominance of Southern States in GDP Contribution: Karnataka, Andhra Pradesh, Telangana, Kerala, and Tamil Nadu contributed over 30% of India's GDP in 2023-24.
- West Bengal’s share has dropped from 10.5% (3rd largest) in 1960-61 to just 5.6% in 2023-24.
Better Performance of Maritime States Overall, maritime states have clearly outperformed the other states, with the exception of West Bengal.

An infographic showing the meaning of dutch disease. ‘Dutch disease’ refers to a paradox in economy wherein rapid development of one sector of the economy (particularly natural resources) leads to a decline in other sectors.

Diverging Paths of Punjab and Haryana: Punjab’s per capita income (PCI) fell from 119.6% in 1960-61 to 106.7% in 2023-24. Whereas Haryana’s relative PCI has risen from 106.9% (1960-61) to 176.8% (2023-24).
- This divergence raises a question whether Punjab's focus on agriculture contributed to a form of 'Dutch disease,' hindering its transition to industrialization.
Eastern states remain a concern: Over several decades, West Bengal’s relative economic performance has weakened. While Bihar's relative position has stabilized in the last two decades, it still lags significantly behind other states.

Factors responsible for regional disparity

Historical: British policies favoured resource-rich areas (like Kolkata, Mumbai and Chennai), creating economic disparities and regional imbalances that persist in India today.
- Historically, developed states have efficient governance systems, which cannot be easily transferred across regions.
Geographical: Difficult terrain (e.g., North-Eastern states) raises administration and project costs. Adverse climates, like frequent floods in Bihar and Assam slows down development
Economic:
- Dominance of primary economic activities: States with more people in manufacturing and services sectors have higher income compared to those dependent on agriculture.
  - E.g. States such as Maharashtra and Gujarat have higher per capita income as compared to Bihar and Uttar Pradesh.
- Infrastructure Deficit: Poor transportation, banking services etc. limits growth in underdeveloped regions.
Governance
- Political Instability: Unstable governments and law and order issues discourage investment and lead to capital flight.
- Failure of Planning Mechanisms: Industries prefer locations with established resources such as consistent power and water supply, road and railway infrastructure and skilled labour.

An infographic showing Implications of Regional Disparity in Development. Key Implications are as follows- • Weaponization of drones: Modification of small commercial drones allows for easy carrying of explosives or weaponry, enabling targeted attacks on individuals or existing infrastructure. • Cross-Border Smuggling and illicit Trafficking: Commodities such as drugs, arms and explosives can be easily smuggled and trafficked across the border with the use of drones. • Disruption of Critical Infrastructure: Drones can carry out cyber-attacks, electronic jamming or physical attacks to disrupt infrastructure networks. • Privacy concerns: Drones loaded with high definition cameras and gadgets can pose threat to privacy of common citizens. • Drone Swarms: It refers to a situation where a large drones operate autonomously in coordinated formations, potentially overwhelming defences.

Initiatives to eliminate regional disparity in growth

Aspirational Districts Programme (ADP): It aims to quickly transform 112 most under-developed districts across the country.
Aspirational Block Programme (ABP): For improving governance to enhance the quality of life of citizens in the most difficult and relatively underdeveloped blocks of India (500 blocks from 27 states and 4 UTs).
‘Vocal For Local’ Initiative Fostering Grassroots Entrepreneurship and Self- reliance: Launched under ABP for encouraging a spirit of self-reliance among people of Aspirational Blocks, propelling them towards sustainable growth and prosperity.
Human Resource Development: E.g. more incentive incentives is provided to beneficiary and ASHA worker under Janani Suraksha Yojana in Low performing States for institutional delivery.
Border Area Development Programme (BADP): To meet the special developmental needs and wellbeing of the people living in remote and inaccessible areas situated near the international borders

Way Ahead to Reduce Regional Disparity in Growth

Tailored Approaches: E.g. Increased focus on programs such as Hilly Area Development and Drought Prone Area Development with target specific regional needs instead of a one-size-fits-all approach.
Performance-Based Funding: Funding should be tied to meeting development standards, focusing on priority areas based on need and industrial backwardness.
Strengthening of Good Governance in backward states: Effective administration helps states raise revenues, attract investment, and improve resource use, especially in backward regions.
Balanced Infrastructure Development: Improving infrastructure (power, transport, telecom, irrigation) in underdeveloped states is key to boosting investment and quality of life.
Sectoral Investment
- Investment in agriculture needs to be stepped up especially in the lagging regions with a focus on backward and forward linkages.
- Service sector has been found to be the new driver of the growth process. Thus there is a need to promote banking and insurance sector, infrastructure to accelerate growth on priority, in backward regions.

Conclusion

For achieving balanced regional development, focus should be on creating an environment that fosters innovation, attracts investment, and ensures efficient utilization of resources. Strengthening governance, improving infrastructure, and promoting healthy competition between states through cooperative and competitive federalism are essential steps.