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Title: PROBLEMS OF REGIONAL DEVELOMENT IN A GLOBALISED ECONOMY : THE CASE OF INDIA


1
PROBLEMS OF REGIONAL DEVELOMENT IN A GLOBALISED
ECONOMY THE CASE OF INDIA
  • Prof. R.P. Misra
  • President
  • Sustainable Development Foundation, India
  • Email sdf.misra_at_gmail.com

2
Indias Federal Structure till 1990s
  • UNION
  • STATES
  • DISTRICT
  • BLOCK / TALUKA
  • VILLAGE

3
Federal Structure After 1992 Constitution
Amendment in India
Central Government
State Government
Local Government
Urban Local Bodies
Rural local Self- Governing Institutions
  • District Panchayats
  • (540)
  • Corporations
  • Intermediate
  • Panchayats (6096)
  • Municipalities
  • Town Areas
  • Village Panchayats
  • (2,32,000)

4
Structure of the Indian Constitution
  • Article 1 (1) of the Constitution India, that is
    Bharat, shall be a Union of States.
  • There are
  • 28 States and
  • 7 Union Territories.
  • Neither Federal in the classical sense nor
    Unitary in character.
  • Some call it quasi federal

5
Structure of the Indian Constitution
  • Constitution of India follows a unique system of
    three-tier polity - the predominant strength of
    the Union is blended with the essence of
    cooperative federalism.
  • Several features have been designed to
    institutionalize the concept of cooperation.
  • The wide range of Concurrent jurisdiction and
    intertwining of certain items in the State List
    with several entries in the Union List are
    examples.

6
Legislative Relations between the Union and the
States
  • Extent of Laws made by Parliament and by the
    Legislatures of State
  • Parliament may make laws for the whole or any
    part of the territory of India.
  • Legislature of a State may make laws for the
    whole or any part of the State.

7
Division of Legislative Jurisdiction
  • There are three lists in the Seventh Schedule of
    the Constitution
  • List I (Union List)
  • List II (State List)
  • List III (Concurrent List)
  • Parliament has exclusive power to make laws with
    respect to any matter contained in List-I (Union
    List). Article 246(1)

8
Division of Legislative Jurisdiction
  • Parliament as also Legislature of any State have
    power to make laws with respect to any matter
    contained in List-III (Concurrent List).
  • Legislature of any State has exclusive power to
    make laws with respect to any matter contained in
    List-II (State List).
  • Parliament can make laws with respect to any
    matter contained in the State List for any part
    of the territory of India not included in a
    State. Article 246(4)

9
Financial Relations between the Union and the
States
  • Financial arrangements have two main aspects
  • Distribution of taxation heads (Articles 246, 248
    and 265, read with the Legislative Lists I and
    II) and
  • Distribution of revenues and sharing of resources
    between the Union and the States (Chapters I and
    II of Part XII of the Constitution).

10
Financial Relations between the Union and the
States
  • Distribution of taxation powers
  • Separate heads of taxation for the Union and the
    States are provided in Lists I and II.
  • No tax can be levied unless it is related to a
    specific head of taxation in List I or List II.
  • There is no head of taxation in the Concurrent
    List (Union and the States have no concurrent
    power of taxation).

11
Financial Relations between the Union and the
States
  • Distribution of taxation powers
  • Residuary power of taxation vests in the Union.
  • There are thirteen taxation heads comprised in
    Entries 82 to 92B in the Union List and
  • Nineteen taxation items comprised in Entries 45
    to 63 of the State List.

12
Financial Relations between the Union and the
States
  • Broad Principle of Allocation of Heads
  • Taxes which are location-specific and relate to
    subjects of local consumption have been assigned
    to the States.
  • Those taxes which are of inter-State significance
    and where the tax-payer can gain or evade tax by
    shifting his habitat, or where the place of
    residence is not a correct guide to the true
    incidence of tax, have been vested in the Union.

13
Financial Relations between the Union and the
States
  • Finance Commission
  • Determination of shares of the States in the
    aforesaid taxes and duties and their inter se
    allocation as also of grants-in-aid of revenues,
    is done on the recommendations of the Finance
    Commission, constituted every after five years.
  • Every recommendation made by the Finance
    Commission together with an explanatory
    memorandum as to the action taken thereon has to
    be laid before each House of Parliament.

14
Eleventh Schedule lists 29 matters to be
delegated to the local bodies
Agriculture, incl. extension
Land improvement, land reforms, consolidation
soil conservation.
Minor irrigation, water management watershed
devpment
Animal husbandry, dairying and poultry
Fisheries 
Social forestry farm forestry
Minor forest produce
Fuel and fodder
Maintenance of community assets
Rural housing
Drinking water
Poverty alleviation programme
Public distribution system
Technical training vocational education
Education, including primary and secondary
schools
Cultural activities
Libraries
Adult and non-formal education
Welfare of the weaker sections, in particular of
SCs and STs
Social Welfare, Welfare lf handicapped and
mentally retarded
Women and Child development
Family welfare
Roads, culverts,bridges, ferries, waterways
other means of communication
Non- conventional energy
Health and sanitation hospitals. Primary health
centers dispensaries
Markets Fairs
Khadi, village and cottage industries
Small scale industries, food processing
industries
Rural electrification, distribution of
electricity
15
India on the March
  • India is on the move. So say the India watchers.
    It is no longer compared with the USA or West
    European countries in matters economic growth.
    The only country it can be compared with is
    China. All eyes are set on which of these two
    global giants would make to the top in the next
    two decades.
  • Both have more than a billion people each
  • Both are huge countries in terms of area
  • Both have switched over from socialist to
    capitalist mode of production during the last two
    decades and
  • The GDP of both is growing at the rate of around
    9 percent per annum as compared to 1.8 percent
    for the developed countries of the world.

16
  • The speed at which India is advancing
    economically, and technologically is phenomenal.
    Its economy rarely grew at more than 3-4 percent
    from 1947 to 1970s or so (THE HINDU RATE OF
    GROWTH), slightly above the rate of population
    growth. 
  • Then it increased to 5-6 percent during 1980s.
    And now it hovers around 9 percent. This year
    (2007-08) it has become a trillion dollar
    economy and the per capita income has crossed
    Rs. 3,000, which in dollars (PPP) means   300
    per head. Foreign institutional investors and
    rating agencies are upbeat on Indias future.
  • Indias exports have gone up from US 18.1
    billion in 1990-91 to US 52.8 billion in
    2002-03. This is despite the fall of American
    dollar vis-a-vis Indian rupee making it far more
    difficult to export.
  • The corporate results, by and large, have been
    encouraging and Indian companies mobilized a
    staggering amount of 30 billion in 2007-08.

17
India's Export and World Trade, 1990-2002 (in
billions) 
1990 1995 2000 2001 2002
Value of India's Exports 17.969 30.630 42.101 43.3 49.25
World Trade (Exports) 3438.6 5120.2 6310.1 6120.8 6138.9
Share of India in World Trade (Exports) 0.52 0.60 0.67 0.71 0.80
18
BUT ALL THAT GLITTERS IS NOT GOLD
  • Poverty in the Midst of Plenty
  • Economy Is Growing, but Employment Is
  • Shrinking
  • Widening Rural-Urban Divide
  • Growing Regional Disparities
  • Environmental Degradation

19
Poverty in the Midst of Plenty
  • India is shining but not the whole of India one
    fifth of the 1.2 billion people have become
    richer they can be compared with the rich
    anywhere else in the world. Pretty soon we would
    have more billionaires than any other country in
    the world.
  • Another one fifth has improved its economic base
    and is better off than earlier propelling
    consumerism to attain new heights.
  • But the remaining half of the population has
    gained little or not at all. At least 15 percent
    has rather lost. Below the veneer of shining
    India, is the India of massive poverty,
    environmental degradation and growing regional
    disparities.
  • No scheme appears to work. People caught in the
    whirlwind of globalization are unable to see the
    writings on the wall.

20
  • More than 60 percent of the people of India
    depend on agriculture for livelihood, but the
    contribution of agriculture of GDP has secularly
    declined from 56.6 percent in 1950s to less than
    19 percent in 2004 it was 18 percent in 2006)
  • Poverty Level has come down but the number of
    people below the poverty line has not declined so
    fast.
  • According to some it has gone up. The official
    figures show that the percentage of population
    living in poverty fell sharply from 56 per cent
    in 1973-74 to 26 per cent in 1999-2000 to 20
    percent in 2006.
  • The number of poor people declined steadily from
    321 million in 1973-74, to 240 million in
    1999-2000.
  • In India, the poverty lines are described as
    permitting a calorie intake of, say, 2400
    calories in rural areas and 2100 calories in the
    urban areas.

21
Employment Situation Has Worsened
  • Since more than 90 per cent of India's employment
    is in the unorganized or informal sector, there
    are no reliable statistics on employment.
  • According to a recent government report 'the
    unemployment rate in India has increased
    significantly since 1993-94 and was above 7.3 per
    cent in 1999-2000 compared to 6.0 per cent in
    1993-94 on Current Daily Status basis .
  • The present rising unemployment is primarily an
    outcome of a declining job creating capacity of
    growth, observed since 1993-94.
  • The employment growth fell to 1.07 per cent per
    annum (between 1993-94 and 1999-2000) from 2.7
    per cent per annum in the past (between 1983 and
    1993-94) in spite of acceleration in GDP growth
    from 5.2 per cent between 1983 and 1993-94 to 6.7
    per cent between 1993-94 and 1999-2000.
  • It means that the capacity of job creation per
    unit of output went down about three times
    compared to that in the 1980s and early 1990s.'

22
Rural-Urban Divide Has Widened
  • An equally disturbing facet of growing
    socio-economic disparities is the growing
    rural-urban divide that is brought out by the
    National Sample Survey Organisation's (NSSO)
    household consumer expenditure surveys for recent
    years.
  • According to the data complied by the NSSO, the
    average monthly per capita expenditure (MPCE) by
    rural households during 2000-01 (July-June) was
    Rs 494.90, which was just a little over 54 per
    cent of the corresponding figure of Rs 914.57 for
    a typical person in urban India.
  • Cities especially the large cities are the
    engines of growth. The have the necessary
    infrastructure for manufacturing as well as IT.
  • Naturally then the large cities have more
    activities both in the formal and informal
    sectors of the economy, and hence more employment
    opportunities and income.

23
  • This has led to massive distress migration from
    rural to urban areas. As the youthful population
    from rural areas shifts to large cities,
    agriculture is orphaned, and the cities become
    slums.
  • There is hardly a large city in India which does
    not have at least 40 percent of its population in
    slums.
  • While over 60 percent of the people of India
    depend on agriculture, the contribution of
    agriculture to the national GDP ha come down to
    less than 20 percent.
  • No wonder then that the gap between the average
    per capita expenditure for urban and rural areas
    has widened by over 8 percentage points between
    1987-88 and 2000-01.
  • The urban-rural gap is much more pronounced for
    non-food vis-à-vis food items. An average urban
    resident's monthly expenditure on food items
    during 1987-88 at Rs 139.73 was higher than the
    corresponding non-food spending of Rs 110.18.
  • But in 2000-01, the position had reversed, with
    average non-food expenditure (Rs 514.01)
    exceeding that of food expenditure (Rs 400.57).

24
Regional Disparities Have Widened 
  • India is a land of contrasts. India is growing
    fast but base of its economic upswing is narrow
    and fragile.
  • Rural India is yet to benefit from economic
    reforms set in motion during the last two
    decades.
  • Agriculture, on which a vast majority of the
    population and a large part of the industry
    depend, is not growing fast enough to keep pace
    with the other sectors of the economy.
  • In fact it often becomes a drag on the
    economy. More industrialized and urbanized a
    region is more developed it often is.
  • Regional disparities exist no matter at what
    administrative level we look at national, state,
    and district.
  • At the national level the southern and western
    states (Kerala, Tamil Nadu, Andhra Pradesh,
    Maharashtra, Goa and Gujarat) are far more
    developed than the northern states (UP, Bihar,
    MP, Chhattisgarh, Orissa, Jharkhand, together
    known as Bimoru states).
  • In between are the north-western states like
    Rajasthan, HP,

25
Regional Disparities in India
26
  • Development is not uniform within the states.
    Even advanced states have poor districts, and
    less developed states have developed districts.
  • A Recent World Bank Report on India (Sustaining
    Reform, Reducing Poverty, 2003) as also the
    UNDP's Human Development Report 2003 have
    expressed grave concern over the widening
    inter-state disparities and the growing
    urban-rural divide in India.
  • The World Bank Report says that development has
    been uneven and, as a result, poverty is getting
    concentrated in the slower growing states of
    Uttar Pradesh, Bihar, Madhya Pradesh and Orissa.
  • The report adds "Accelerating growth and poverty
    reduction in India cannot be achieved without
    also accelerating growth in India's lagging
    states."

27
  • The UNDP's Human Development Report (HDR) bemoans
    that India contains regions of intense poverty
    relieved little by overall national growth. It
    points out the enormous disparities across
    India's states with extremely high gaps in
    literacy between low social classes and the rest
    of the population.
  •  Census 2001 revealed disturbing disparities in
    the demographic indicators such as population
    growth rates, literacy levels and sex ratio.
  • For instance, Bihar, with a dismal record of
    human development indicators, recorded a much
    higher rate of population growth at 28.3 per cent
    during the decade of the 1990s against 23.3 per
    cent during the previous decade.
  • Similarly, Uttar Pradesh, the most populous
    state in the country, recorded a higher
    population growth of 28.3 per cent against 23.38
    per cent during 1981-91. Rajasthan also recorded
    a high rate of population growth at 28.33 per
    cent during 1990s (28.44 per cent).

28
  • More than half of India's poor live in just four
    states. Over two-thirds of poor live in rural
    areas and depend largely on agriculture.
  • The highest incidence of poverty is found among
    people of scheduled castes and scheduled tribes,
    who face major social barriers that exclude them
    from opportunity.
  • It is evident that if this trend of widening
    regional disparities and growing rural-urban
    divide is not arrested and reversed soon, it will
    not only continue to pull down the overall growth
    rate of the economy, but will lead to serious
    social strife in the country.
  • It is, therefore, time the policy-makers viewed
    the situation with a new sense of urgency and
    initiated measures to contain the damage.    

29
Uttar Pradesh (UP) A Case Study
  •  U.P. is the 6th largest country of the world
    in terms of population. As in 2008, it has 180
    million people.
  • The gangetic Plain, that spans the state, has
    been the ancient seat of Hindu religion, learning
    and culture, the birth place of the Indo-Islamic
    syncretic culture of medieval period, a center of
    nationalism during the colonial period and has
    continued to play a prominent role in Indian
    political and cultural movements.
  • The state has a rich heritage of traditional
    crafts and cottage industries of various types
    that require highly skilled craftsmen and
    artisans.
  • It was one of the most developed provinces of
    India in 1950s and continues to determine the
    political colour of the country.

30
Study Area State of Uttar Pradesh
31
Regional Structure
  • The state comprises of five distinct regions.
    These are 
  • Rohilkhand in the north (better developed)
  • The Doab (land between two rivers) region (well
    developed agriculturally)
  • Awadh (Oudh) in the centre (better developed
    industrially)
  • The Eastern UP or Poorvanchal, (very poor) and
  • Baghelkhand and Bundelkhand in the south
    (Poorest).
  • It has 70 district grouped into seventeen
    divisions and 403 state legislative
    constituencies. Kanpur Nagar is the largest
    district of the state.

32
  • As per 2001 Census of Population, male literacy
    rate was 70.23 percent and a female literacy rate
    was 42.98 percent. But far more is needed
    especially because the primary education in the
    state has deteriorated in quality.
  • The major economic activity in the state is
    agriculture engaging around 70 percent of
    population of the state.
  • 46 percent of the state income was accounted for
    by agriculture. UP has retained its pre-eminent
    position in the country as a food-surplus state.
  • The production of foodgrains has increased from
    14.5 million metric tons in 1960-61 to 42.5
    million tons in 1995-96, showing an average
    annual growth rate of 3.1 percent, which is much
    higher than the population growth rate.

33
National share of major food commodities from
Uttar Pradesh
Commodity National Share
Potato 47
Sugarcane 45
Wheat 38
Rice 32
Groundnut 34
Molasses 34
Sugar 30
Tobacco 20
34
  • UP has witnessed rapid industrialization in the
    recent past, particularly after the launch of
    policies of economic liberalization in the
    country.
  • As of March 1996, there were 1,661 medium and
    large industrial undertakings and 296,338 small
    industrial units employing 1.83 million persons.
  • The per capita state domestic product was
    estimated at Rs 7,263 in 1997-98 and there has
    been visible decline in poverty in the state.
    Yet, nearly 40 percent of the total population
    lives below the poverty line.
  • Uttar Pradesh's gross state domestic product for
    2004 was 339.5 billion by PPP and 80.9 billion
    by Nominal, making it the second largest economy
    in India after Maharashtra and a bigger economy
    than many of the world's big economic players
    like Israel, Switzerland and Hong Kong. The state
    does not lag behind in IT.
  • It exports of software is only mext to Karnataka
    in South India.. But the industry is concentrated
    in just three districtz around the National
    Capital, Delhi, and Lucknow-Kanpur Corridor.

35
Reasons for UPs Backwardness
  • Locational Disadvantages
  • Unimaginative Political Leadership
  • Lack of Technology
  • Neglect of education
  • Misallocation of resources
  • Population pressure
  • Low level of Urbanisation
  • Corruption

36
TOWARDS SARVODAYA
  • If the ultimate goal of economic growth is
    improvement in the quality of life of the people
    as reflected by higher level of income, higher
    level of human development, and higher level of
    human dignity, peace and harmony, then economic
    growth must be accompanied by higher level of
    HDI, distributive justice, and inner development
    of man as a human being.
  • Unfortunately, the modern growth proponents lay
    too much emphasis on income and consumer goods
    and too little on family ties, social solidarity
    and advancement towards HIGHER LEVEL OF
    CONSCIOUSNESS.
  • We need outer development as much as inner
    development. The widening gap between the two has
    created a situation in which no one is at peace
    rich or the poor all are dissatisfied. Some have
    even chosen to commit suicide both in the
    developed and developing parts of the world

37
  •  There is enough on this earth to meet
    everyones need but not everyones greed said
    Gandhi long ago. The greed must give place to
    caring and sharing.
  • Economic growth must take place within the
    threshold limits of nature and it must be
    distributed equitably not equally) so that all
    can have the privilege to lead a good quality of
    life. The present distributional system we have
    adopted is not necessary ideal.
  • As gender inequality was built in our thinking
    and doing things, so is the economic inequality
    between man and man, region and region and nation
    and nation.
  • There is no way to create a society imbued with
    love, peace, justice, equality and high quality
    of material life without changing the way we have
    been managing our affairs from times immemorial. 

38
  • Gandhi advocated the concept of Sarvodaya i.e.
    development of all, not just the development of
    the majority, or maximum number of people, from
    all perspectives.
  • In his model there is no place for any kind of
    poverty material or spiritual. Those who are
    rich need spiritual development so that they can
    share their riches with others and those who are
    poor need material development first.
  • Bread is the God of the poor. The
    material-cum-spiritual developments would lead to
    a society that is balanced, sustainable and worth
    living.
  • If material advancement alone can give happiness
    to people, why is it that the rich commit
    suicide, and kill each other.

39
  • So long as the present of mode of development
    tilted as it is towards material welfare of some
    (not all), unmindful of the spiritual side of
    man, there would neither be peace within or
    outside, nor equality among peoples, and regions
    whether they live in cities or villages whether
    they have higher income or lower.
  • Further, the pursuit of the present mode of
    development is likely to lead to more violence
    against fellow human beings and against nature.

40
  • We thus need a new model of development which
    takes care of economic and technological
    development without neglecting the human
    development.
  • Human development has however to be refined not
    only in terms of social development but also in
    terms of spiritual (not to be confused with
    religious) development.
  • In my view the Gandhian concept of Sarvodaya
    offers the basic principles on which this model
    can be built.

41
  • THANK YOU
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