Globalization Income Inequalities and Regional Disparities in India

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There has been a continuous debate over globalization, income inequalities and regional disparities in India. While some scholars say that globalization has cast a favorable impact on the overall economic condition of the country, there are also lots of scholars who argue that factors such as poverty, income inequality and regional disparities have not been affected by globalization. In order to have an idea, one needs to deeply analyze various factors.

Globalization and income inequality

Although globalization has led to the economic development in the country, it has not really helped to minimize income inequalities across the country. Recent surveys say that lots of people across the country still live below the poverty line and their standard of living has gone down considerably. In fact, the poverty level in India is much more than that of China. One of the main causes of poverty in India is income inequality. While the effects of globalization, economic liberalization and market growth are being felt in the cities and urban sectors across the country, most of the rural areas are still not so developed and the condition has also not significantly improved. No doubt, there has been some improvement but still a lot needs to be done.

A significant portion of the rural mass does not have access to the basic amenities such as electricity, education, sanitation, drinking water, and infrastructure. The wealth distribution pattern is also uneven in the country. Recent surveys have shown that the top 10% of the income groups share around 33% of the total income of the country. Even after globalization and economic progress, around a quarter of the population of the country has a earning less than the minimum level of $0.40 per day.

Globalization and regional disparities

Globalization has also not done much good to reduce disparities between various regions and states across the country. While some states have a high earning, there are also some states which have a very low growth rate. Some of the states which have a high income are Gujarat with 8.8%, Delhi with 7.4% and Haryana with 8.7%. In comparison to these, Bihar with 5.1%, Uttar Pradesh with 4.4% and Madhya Pradesh with 3.5% are some of the lowest ranking states with very little socio economic growth.

To minimize the income inequalities and regional disparities across the country, the government has taken a number of steps. Lots of rural development programs have been initiated to make the rural mass self sufficient and financially stable. In this regard, the government has set up village cooperative banks, Regional Rural Banks and so on to help the poor and the villagers. The government also offers land for farming at cheap rates, tax relief and other incentives to minimize regional disparities and income inequality.

Growth and Regional Disparities

India saw an annual growth rate of GDP (Gross Domestic Product) of only 3.6% during the 3 decades, post-independence. It's a growth of only 1.4% in terms of per capita. The economy of the country only moved towards higher growth trajectory during 1980s, when it saw a growth rate of 5.4%. The growth rate of GDP soared up to 7.3% by 2007-08, whereas the per capita GDP saw a growth of 5.7%. Due to sufficient foreign exchange reserves, moderate inflation, stable exchange rates and adequate food stocks, the country achieved a sustainable growth rate.

However, the gross state domestic product growth rates largely varied between states in India. The states like Assam, Uttar Pradesh, Madhya Pradesh and Bihar saw a growth rate of less than 5% in pre and post reform period. On the other hand, states like Andhra Pradesh, Tamil Nadu, Gujarat, Karnataka, Haryana saw a growth rate of less than 5% during 1980-93, which improved considerably during 1993-2006.

States GSDP Per Capita GSDP
1980-81 / 1992-93 1993-94 / 2005-06 1980-81 / 1992-93 1993-94 / 2005-06
Andhra Pradesh 5.72 6.53 3.50 5.41
Assam 3.98 3.54 1.75 2.14
Bihar 3.41 4.73 1.23 5.26
Gujarat 6.77 7.10 4.74 5.30
Haryana 5.75 6.98 3.24 4.81
Karnataka 5.57 6.88 3.59 5.50
Kerala 3.82 6.28 2.44 5.51
Madhya Pradesh 4.49 4.91 2.07 6.00
Maharashtra 6.32 6.17 3.97 4.42
Orissa 3.67 5.53 1.80 4.31
Punjab 5.21 4.53 3.23 2.93
Rajasthan 7.37 5.44 4.74 3.29
Tamil Nadu 5.46 6.12 4.03 5.16
Uttar Pradesh 4.47 4.19 2.17 2.59
West Bengal 4.57 6.61 2.35 5.23

Source: CSO

Finally, globalization has had its effect on Indian economy. There also exist income inequalities and regional disparities. Yet, these shouldn't be treated as the inevitable outcomes of globalization. There are also some other factors like politics, political institutions, political mobilization, and policy frameworks etc. which play major role in creating income inequalities and regional disparities in the country. Political preferences often slow down the process of growing inequalities, which avert the movement from agriculture to service.

Last Updated on 5/18/2011