Concept and Strategies of Regional Development in India

Concept of Regional Development

• Regional development is the provision of aid and other assistance to regions which are less economically developed. It is a process of growth, expansion or realization of potential; bringing regional resources into full productive use. Regional development may be domestic or international in nature. Its implications and scope vary in accordance with the definition of a region, and how the region and its boundaries are perceived internally and externally.
• The concept of regional development has evolved significantly across time and discipline. In the 1950s, when the discipline first emerged, it had a strong economic base — the focus was on what firms did in regions and how their performance influenced economic indicators: employment, profit, GDP, and growth.
• Towards the end of the 20th century, regional development became more multi-disciplinary. Political science, public policy, and sociology became critical disciplines alongside economics, focusing more on the notion of what a region might be and how a range of factors — not just economic — shaped the idea of a region.
• In the 21st century, economic geography joined the disciplines, and the focus of regional development became more centred on the spatial dynamics of regions — as places to live, work and invest. The focus is just as much on people as drivers of regional development as on smokestack industries, regional development agencies, and firms.

What is a Region in This Context?

• The word ‘region’ in the context of development is used to stand for a tract of land which is smaller than the individual state but larger than its basic territorial unit, namely the district.
• This meaning has been recognised in governmental pronouncements. The Planning Commission used this term to convey such a meaning, but in none of the Five-Year Plans was this made fully explicit, contributing to the sectoral bias of Indian planning.

Regional Planning is essentially a process of orderly and systematic anticipation of the future of a region, involving recommendations of the necessary remedial and constructive actions by public and private agencies to achieve the objectives of the plan/regional community. Regional planning may involve extensive areas that include one or more regions or more limited areas such as drainage basins or metropolitan areas.

Planning = “making decisions in advance” — a highly disciplined and formalised activity through which a society induces change in itself. It involves the application of scientific knowledge to solve problems and achieve the goals of a social system.

Development — A Multi-Dimensional Understanding

• Development is not simply economic growth. It is a richer, multi-dimensional concept with five essential components that are critical for understanding regional development in India:
  1. Structural change: Development implies structural change — institutional, social, and economic (both sectoral and spatial). The implicit assumption is that change in one element depends on and generates changes in all others. Example: land reform (institutional) → agricultural productivity (economic) → urbanisation (spatial).
  2. Change in desired direction and at desired speed: Development means change in the desired direction — the direction and rate of change depends upon the goals and objectives of development. What India considers “development” in Jharkhand (tribal self-sufficiency vs. industrial growth) reflects contested value choices.
  3. Policy interventions: Development presupposes policy interventions — direct or indirect — in achieving given goals and objectives. Without planned action, market forces tend to deepen rather than reduce regional disparities (Myrdal’s backwash dominates).
  4. Socio-psychological transformation: Development involves the socio-psychological transformation of human beings to prepare them for the eventual as well as current benefits occurring from the changing socio-economic structure. This includes changes in attitudes, aspirations, gender relations, and social capital.
  5. Temporal, sectoral, and spatial phasing: Development involves integration of planning across time phases (long-term → medium-term → annual plans), sectors (agriculture, industry, services), and space (national → state → district → block). The failure to integrate these three dimensions is the core weakness of India’s sectoral planning tradition.

The Critical Failing of Indian Planning: Economic planners viewed regional development problems from sectoral angles so that the region became synonymous with sectoral planning for a subnational territory, with the result that all the weaknesses of central planning were introduced at the regional level, keeping in view the lack of interest in spatial organisation and development. Our programmes lack spatial dimensions. India’s planning has been traditionally sectoral in nature — investments are sector-specific and lack spatial content. That is why the Green Revolution increased regional disparities and industries remained confined to a few areas such as Gujarat and Maharashtra.

Balanced Regional Development — Meaning and Objectives

• Balanced regional development does not mean equal development of all regions. It simply implies the fullest development of the potentialities of an area according to its capacity so that the benefits of overall economic growth are shared by the inhabitants of all the regions. It does not mean self-sufficiency in each region, nor does it mean an equal level of industrialization, nor a uniform economic structure for each region.

Objectives of Balanced Regional Development in India

• This type of development in countries like India aims to achieve the following objectives:
  1. Minimize backward effects — counteract the backwash effect of Myrdal’s cumulative causation; prevent resources from draining toward developed poles
  2. Rapidly develop the economy smoothly — ensure faster economic growth without the social instability that extreme disparities generate
  3. Develop and conserve resources — ensure sustainable extraction and use of natural resources in all regions; avoid over-exploitation in some and under-utilization in others
  4. Maintain political stability — prevent regional grievances from fuelling insurgency (LWE/Naxalism), separatism, or demand for new states
  5. Defend the nation — develop economically strategic backward border regions (NE India, Ladakh, J&K) to strengthen national security and territorial integrity
  6. Decrease vertical and horizontal inequalities — reduce both horizontal (region-specific, e.g., BIMARU states) and vertical (Centre-State-Panchayat level) inequalities
  7. Increase industrialization — raise the level of industrialization in both heavy and basic sectors, extending it to backward regions rather than concentrating in already-developed areas

Evolution of Regional Planning Thought in India

• India’s approach to regional development has evolved in response to both internal planning failures and global intellectual shifts. The progression can be understood in three broad phases:

• The first time regional-level planning was used by any country was by the USA in Tennessee River Valley Planning (TVA, 1933). This was used for:
  • Construction of roads and rails
  • Agriculture practice and flood control
  • Resource mapping and development of the valley as an integrated region
  • Generating hydroelectric power — electrifying the depressed rural South
• The TVA model became the template for India’s river valley development projects — Damodar Valley Corporation (DVC, 1948), Bhakra-Nangal, Chambal Valley, Nagarjunasagar — all conceived as macro-level regional planning exercises to transform backward river basin areas through integrated water resource development.
• The planning process initiated after Independence resulted in: Multipurpose Projects for macro-level regions → to advanced packages for Bundelkhand, Kuttanad, etc. at the meso-level → to micro-level block/district planning through Panchayati Raj. The effort of the Planning Commission was also to bridge the functional and spatial gap between underdeveloped and developed regions. Planning Commission, with the help of NDC and now NITI Aayog, provides participation of every state in resolving issues related to natural resources, water sharing, and inter-state disputes. Growth Pole Theory was used, but in the absence of functional linkages and the non-existence of growth spread channels, the real spread of growth did not happen, aggravating disparities in regional development.

Planning Approaches for Regional Development

• Regional planners have used three distinct approaches for spatial planning in India.
  • Spatial Approach
    • In the spatial approach, area-specific planning is put into action for the achievement of particular goals, keeping local socio-economic and geographical factors in account. The planning process is tailored to the characteristics of the specific region being developed. Example: planning to reduce poverty in hilly areas by the promotion of tourism; watershed development in drought-prone areas; coastal zone management for island territories.
  • Temporal Approach
    • In the temporal approach, time is the major factor taken into consideration in the planning process of a particular region. Goals are framed with specific time-bound targets. Example: planning for doubling farmers’ income by a specific year; achieving 100% electrification by a deadline; reaching zero open defecation by a target date. India’s Five Year Plans are fundamentally temporal planning instruments.
  • Regional Planning Approach
    • In this approach, the planning process is limited to a particular area, keeping the various planning entities of the region in account. Example: planning for development of the Chota Nagpur region through industrial development; KBK region (Kalahandi-Bolangir-Koraput) special plan; Bundelkhand package; North-East India special development plan. Here regional planners identify hierarchical relationships and decide which activity should be located at which level of the hierarchy, so that complementary functions exist among them to ensure integrated development of the entire region.

Central Place Theory, Growth Poles, and Growth Centres are examples of the implementation of various planning approaches for a region. Following these principles, planners deliberately tend to locate growth poles and growth centres at a certain level of the hierarchy and simultaneously facilitate the development of lower-order centres — so that complementary functions exist across the settlement hierarchy and the benefits of development can diffuse from top to bottom.

Sectoral Planning vs. Spatial Planning

“Our programmes lack spatial dimensions. Traditionally India’s planning has been sectoral in nature. The investments are sector specific and lack spatial content. That is why Green Revolution increased regional disparities and industries remained confined to few areas such as Gujarat, Maharashtra etc. Growth Pole theory was used but in absence of functional linkages and non-existence of growth spread channels the real spread of growth did not happen aggravating the disparities in regional development.”

Top-Down vs. Bottom-Up Regional Development Strategies

• The second major strategic tension in regional development is between top-down approaches (state-directed, growth pole focused, efficiency-oriented) and bottom-up approaches (community-driven, needs-based, equity-oriented).
• India has progressively moved toward hybrid approaches since the 1990s.

Agropolitan Development — Friedmann’s Bottom-Up Model (1978)

• The agropolitan (agrocity / “city-in-the-fields”) concept presents a countervailing vision to the dominant top-down growth pole strategy. It is a bottom-up approach to planning rural development aiming at bringing real economic and socio-psychological empowerment to rural inhabitants. It shifts the spatial epicentre of human flourishing from urban agglomerations to decentralised and sustainable rural habitats through selective territorial closure (limiting capital outflow from backward regions) and agro-based industrialization at the village level.
  • Selective territorial closure: preventing resource drain from backward regions to developed poles — closing the circuit of economic leakage
  • Agro-based local industries at the block level — not distant urban factories
  • Self-reliance in basic needs: food, water, shelter, health, education at the local level before development extends upward
  • Influenced India’s IRDP approach and R.P. Misra’s Growth Foci concept — service centre clusters at block level
  • Kerala’s People’s Planning Campaign (1996) is the closest Indian model to agropolitan development — devolution of 35-40% of state plan funds to local bodies

K.V. Sundaram’s Five Strategy Framework — Correcting Regional Imbalances

• K.V. Sundaram identified five broad categories of strategies that have been used to address regional imbalances in India. This is the most comprehensive and exam-relevant framework for answering questions on “strategies for correcting regional imbalances.”

1. Industrial Location Policy — Directing Industries to Backward Regions

• Location of public sector enterprises in backward regions to serve as growth poles generating multiplier effects.
• In the 2nd Five Year Plan (1956-61), three integrated steel plants were located in backward regions — Bhilai (MP/CG), Durgapur (WB), Rourkela (Odisha) — in tune with resource endowment and Weber’s principle of least cost location.
• The basic assumption was that these steel plants would serve as growth poles and generate a multiplier effect. However, this did not happen on a large scale: most local population landed unskilled jobs; displaced communities were thrown into cultural mutation — subjected to social evils like human trafficking and drug abuse.
• Industrial licensing and location policies attempted to direct private investment to backward areas — but even “backward area” licenses often went to backward districts of already-developed states rather than genuinely backward states.

2. Incentive and Fiscal Policy — Attracting Private Investment to Backward Areas

• Financial incentives — subsidies, tax exemptions, and special packages — to attract private investment to backward regions. Key instruments:
  • Transport subsidies for backward areas
  • Capital investment subsidies
  • Tax holidays and exemptions for industries locating in backward districts
  • North East Industrial and Investment Promotion Policy (NEIIPP 2007) — for Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura
  • Special Package Scheme for Himachal Pradesh, Uttarakhand, and J&K
  • Special Category States: 90:10 central-state funding ratio (vs 60:40 for general states)
  • Deregulation initiatives (Narsimhan Committee on physical to fiscal controls, Sengupta Committee on public sector, Hussain Committee on trade policy)

3. Infrastructure Development in Backward Regions

• Providing physical and social infrastructure as a prerequisite for development in backward regions — breaking the infrastructure-poverty trap. Key programmes:
  • Pradhan Mantri Gram Sadak Yojana (PMGSY) — rural road connectivity to unconnected habitations
  • East-West Corridor Project and Special Accelerated Road Development Project for North-East (SARDP-NE)
  • Trans-Arunachal Highway for increasing connectivity in the Northeast
  • 25 major rail projects in North-East Region (11 declared national projects)
  • Rajiv Gandhi Grameen Vidyutikaran Yojana → Saubhagya Scheme for rural electrification
  • Jal Jeevan Mission for drinking water connectivity in backward districts
  • AIIMS and central universities established in backward states to address social infrastructure deficit

4. Fiscal Transfers — Finance Commission and Plan Allocation

• Intergovernmental fiscal transfers to ensure backward states can provide basic services despite lower own-revenue capacity. Key mechanisms:
  • Finance Commission devolution formula incorporating income distance, population, area, forest cover, and demographic performance — larger shares for backward states
  • Gadgil-Mukherjee formula for plan assistance allocation — with a “special problems” component for backward states
  • Backward Regions Grant Fund (BRGF) — untied grants to 272 backward districts directly to PRIs (10th FYP onwards)
  • Rashtriya Sam Vikas Yojana (RSVY / National Equal Development Plan) — 10th FYP — for less developed states with high capital investment and institutional reforms
  • Grants for tribal, hill, and border areas under Article 275 of the Constitution
  • Promotion of new financial institutions in backward regions — Lead Bank Scheme to ensure institutional credit in unbanked areas

5. Area-Specific Development Programmes — Targeted Regional Packages

• Special area programmes for regions with unique disadvantages — drought, desert, hill, tribal, flood-prone, island. These are the backbone of India’s spatial approach to regional development (see Section 9 for details). Also includes institutional innovations:
  • Identification of backward areas and allocation of dedicated funds
  • Setting up of Regional Boards with legal powers and funds (Article 321D)
  • Good governance initiatives — less disparity in well-governed states
  • Political will — essential for balanced regional development
  • Aspirational Districts Programme (2018) — NITI Aayog’s real-time monitoring of 112 most backward districts on 49 indicators
  • Special packages: Bundelkhand Package, NE Special Package, KBK Special Plan, Island Development Authority for Andaman and Lakshadweep

Area-Specific Development Programmes — India’s Spatial Strategy

• Since the 5th Five Year Plan, India has systematically developed area-specific programmes targeting regions with unique geographic disadvantages. These represent the most direct spatial strategy for regional development:

Watershed as Regional Planning Unit: One of India’s most significant shifts in regional development strategy has been the adoption of the watershed — a hydrological unit rather than an administrative unit — as the basic planning unit for dryland development. Modern watershed management follows the principle: treat upstream first (ridge-to-valley sequence), involve communities as owners, integrate physical treatment with livelihood development. This bottom-up, ecosystem-based approach is more sustainable than top-down engineering interventions.

Post-Liberalisation (1991 Onwards) — Deregulation and Regional Development

• The 1991 economic reforms introduced significant changes to India’s approach to regional development. The shift from physical controls to market mechanisms had complex spatial consequences:

Deregulation and Its Regional Consequences

• Three reform committees shaped the post-1991 landscape: (1) Narsimhan Committee — focusing on the shift from physical controls to fiscal controls in the financial sector; (2) Sengupta Committee — on public sector improvement; and (3) Hussain Committee — on trade policy.
• As a result, some progress was made in deregulation during the 1980s and accelerated post-1991. Two kinds of delicensing activities took place:
  • (a) 32 groups of industries were delicensed without any investment limit; and
  • (b) in 1988, all industries were exempted from licensing except for a specified negative list of 26 industries.
• Positive effect: Removal of licensing requirements reduced the distortions that allowed backward areas of developed states to corner licenses meant for truly backward regions
• Negative effect: Without location guidance, private investment flowed even more strongly to already-developed regions with better infrastructure and skilled labour — accelerating agglomeration in Gujarat, Maharashtra, Tamil Nadu, Karnataka, Delhi-NCR
• SEZs and industrial corridors: Post-1991 development tools — SEZs, DMIC, Smart Cities — attempt to direct growth to new locations but remain concentrated in accessible coastal and transport-corridor regions
• BIMARU states’ deepening crisis: Market liberalization without compensating spatial policy worsened the BIMARU-advanced state divide. Bihar, UP, Jharkhand, Odisha, and Chhattisgarh did not attract significant private investment despite liberalization

Critical Assessment — India’s Regional Development Experience

What Worked:

• River valley multipurpose projects: DVC, Bhakra-Nangal, Hirakud, Nagarjunasagar — successfully created irrigation, power, and flood control infrastructure across backward basin regions, even if displacement costs were high
• Green Revolution (geographically limited): Dramatically raised agricultural productivity in Punjab, Haryana, Western UP — but worsened inter-regional disparities by not spreading to rainfed areas
• Kerala’s development model: High human development despite low per capita income — demonstrates that social sector investment (literacy, health) generates development outcomes independently of industrialization; closest to balanced regional development
• 73rd Amendment: The most significant structural reform for decentralized regional planning — constitutionalizing the district and block as planning units; enabling democratic accountability through Gram Sabha
• Aspirational Districts: Early evidence of improvement in select indicators (IMR, literacy) in 112 districts suggests real-time monitoring and convergence approach is more effective than previous plan-based approaches

What Did Not Work:

• Growth poles without spread: Steel towns (Bhilai, Bokaro, Rourkela) “stand as monuments of national achievement but regional failure” — islands of development surrounded by seas of backward hinterland. Trickle-down expected but did not materialize at scale
• Industrial licensing: Despite policy intent, 62.42% of licenses in 1956-66 went to Maharashtra, West Bengal, Gujarat, Tamil Nadu — not to truly backward states
• Financial institution bias: Commercial banks acted as channels through which funds from backward states kept flowing to developed states — situation unchanged even after 1969 bank nationalization
• Sectoral planning’s spatial blindness: Plans were sector-specific and lacked spatial content — investments went where returns were highest (already developed areas) rather than where need was greatest
• 3Fs problem in Panchayati Raj: Functions, Functionaries, and Finance not adequately devolved in most states — PRIs remain largely implementers of tied central schemes rather than autonomous planning bodies

“Regional disparities are the manifestation of spatial injustice and should be reduced for attaining the goal of just and egalitarian society. But, in reality the regional disparities in development are more acute and quite persistent at global, national and international level.” The persistence of regional disparities despite 75 years of planning reflects a structural bias toward techno-economic efficiency criteria in resource allocation — meager development resources were invested in economically efficient (already-developed) regions, accelerating disparities. Only strong redistribution mechanisms — Finance Commission devolution with backwardness weights, Special Category Status, BRGF, Aspirational Districts — partially counteract this structural bias.

Summary