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Economic Disparities in India

Economic Disparities in India

Before dreaming to crack CAT 2012 it is must for aspirants to be well versed with general awareness as that would boost confidence and create enthusiasm for the preparation of CAT exam.

Today you will read General Awareness topic: Economic Disparities in India

One of the serious problems faced by India's economy is the alarming growth rate of regional differences among India's different states and territories in terms of per capita income, socio-economic development, poverty and availability of infrastructure. Economic disparity is easily visible in the country by the fact that this is reflected by the fact that 50 percent of the populations in Bihar and Orissa live below the poverty line while states such as Delhi and Punjab exhibit very low poverty ratios. 
As a result of economic reforms, the southern and western States experienced accelerated economic and social development as compared to northern and eastern States. This has led to widening gap in income, poverty and other indicators of development between the two regions. Rural-urban divide had also widened in the wake of reforms. While large and medium cities experience unprecedented economic prosperity, the rural areas experience economic stagnation. As a result, there is widespread agrarian distress which results in farmers’ suicide and rural unrest. Socially backward sections, especially scheduled castes and tribes (SCs and STs) have gained little from the new prosperity which rewards disproportionately those with assets, skills and higher education. STs have often been victims of development as a result of displacement.
The Eleventh Plan stresses the importance of more inclusive economic growth. It emphasizes the need for bridging the divides. Unless these are achieved in a time-bound manner, there could be serious adverse implications for the Indian economy, society and polity. Education and skill formation are principal vehicles for reducing all types of disparities in India.
The various structural gaps which constrain the young people in the backward regions, rural areas and socially marginalized communities to receive quality education need to be removed without delay. This will positively impact on the economic growth by enlarging the pool of knowledge workers significantly. 
Rising economic disparities in India are often cited as the effect of high economic growth after economic reforms where southern and western states, urban areas showed exponential growth leaving behind the northern and eastern states and rural hinterland of the country in the race of economic prosperity.
Now the question arises whether a high rate of economic growth along with widening disparities is sustainable or not.  The growth in post liberalization years had created a few islands of prosperity in the ocean of poverty. In every state, there are few centers of growth while rest of the region is left with little development. 
For instance, In Maharashtra, Mumbai, Pune are witnessing growth while Vidarbha region is still marred by farmers suicide, similarly in Andhra Pradesh, growth is concentrated in Hyderabad and Vishakhapatnam, Kolkata  in West Bengal, Noida and Lucknow in Uttar Pradesh, Bangalore and Mysore in Karnataka etc also show similar trends.
However, faster growth in post liberalization years and thereby globalization and reforms of 1991 cannot be blamed for the rising inequalities on the country because disparities are not the outcome of one becoming poorer but others becoming richer. Thus the growth process itself doesn’t choose the subjects of its fruits and left others but it is an omission on the part of policy makers, administrators etc that such areas are left behind in the race of growth. Historically, it is found that growth follows the good economic and social infrastructure. Lack of better infrastructure in the some regions is the reason behind their economic stagnation. 
In any case, this lopsided growth is not sustainable. Already the sign of growth fatigue are visible in the country. In order to rejuvenate the growth, a big push should be given to the economy and this time, the big push should come from the regions which are lagged behind in the development. 
Nobel Laureate Simon Kuznet in his hypothesis, on the basis of empirical data showed that in case of high rate of growth, income inequalities rises in the initial stage of development but in the later stages, after growth gains momentum, inequalities tend to decrease. In Indian case, probably initial stage of development is yet to give way for other stage.
It is clear that various dimensions of economic and social disparity- regional, rural-urban, social class or gender have aggravated in the recent period. That too during a period when India has been achieving accelerated economic growth and has been emerging as a global player. 
This trend, if not arrested and reversed fast, will have serious adverse implications for the Indian economy, society and polity. As of today, majority of Indians have been bypassed by the process of economic development either are able to contribute to the growth process or receive any tangible benefits. 
Stay tuned to MBA Rendezvous and read General Awareness topics which are meant for CAT aspirants.