ECONOMIC DISPARITIES BETWEEN REGIONS AND POPULATION CATEGORIES

Inspire of the economy growth in India, it is not able to reduce the growing inequalities of the Indian society.

1.   Economic inequality is a hindrance to the process of growth & development in India.

2.   Domestic & foreign investments are not directed to backward regions of the country. This is because our development strategies failed to reduce the extent of regional & sectoral inequalities

3.   In India there are four forms of inequalities. They are

      Inequality of income

      Inequality of consumption expenditure.

      Inequality of asset holding.

      Regional inequality.

4.   Inequality of income & distribution of wealth refers to a situation in which small section of society share large part of nationís income whereas large sections of society are devoid of income.

5.   Inequality in consumption expenditure refers to a situation in which a large percentage of total consumption expenditure is incurred by a small percentage of population. This shows that a large percentage of kottom population has to struggle to survive, whereas a small percentage of top population enjoys lavish lifestyle.

6.   Regional inequality refers to inequality of growth process across various states in the country & different regions with in a single state some states or regions are as more prosperous than the others.

7.   In India inequality of income is calculated based on the data on consumption distribution (provided by NSSO) income tax data.

8.   To examine the distribution of income in India, a committee was appointed by the government under the chairmanship of prof.P.C.Mahalahobis. The committee submitted the report in 1964.

9.   Besides this committee, National Council of Applied Economic Research (NCAER), Reserve Bank of India, World Bank & Many economists have undertaken research studies. Relating to distribution of income.

10. Lorentz curve is used to determine the inequality/equality higher Lorentz ratio or Gini coefficient points to a great degree of inequality.

11. Causes of inequality of income & wealth in India.

12. Inequality in the ownership of assets.

13. Laws of inheritance.

14. Cost of professional training.

15. Inflation.

16. Unemployment

17. Tax evasion

18. Corruption & Smuggling

19. Great Burden of indirect taxation or regressive tax structure.

GOVERNMENT POLICY TO REDUCE INEQUALITIES OF INCOME AND WEALTH:-

Different measures taken by the government to reduce inequalities are.

Land Reforms:-

         These have been introduced to remove inequality in the ownership of land.

         Land in excess of the ceiling limit has been distributed among the tenant farmers, & among the small & Marginal holders.

Expansion of Public Sector:-

         Government pursued a policy of assigning a flagship-sole to the public sector.

         Many commercial banks were nationalised to 1966-68.

         However, since 1991, there has been reversal of the government policy.

         Privatisation has become the centre stage of growth-strategy. This is because public sector has only yielded inefficiency & bankruptcy.

         The Government is providing support to develop small scale industry like MUDRA etc.

         Monopolies & restrictive trade practices Act, 1969 was passed to put a check on concentration of economic process.

Poverty Alleviation Programmes:-

       Government should to frame poverty alleviate programmes particularly those which provide gainful employment to the economically weaker section of the society.

Pricing Policies:-

       Pricing & distribution policies must be designed by the government to reduce the inequalities present in the society. It should provide the basic amenities at lower price to the weaker section of the society.

       Measures taken to balance the regional disparities.

       Great share of central pool of funds should to allocate to backward states.

       Provision of grant in aid by the central Government to the backward states.

       Propagation use of improved dry farming technology.

       Launching of special area programmes like desert development programme, drought prone area programme etc.

       In order to develop hills areas tribal areas drought prone areas, specific plan schemes have been designed with full cultural assistance.

       Income tax concession scheme introduced in April 1974, & it was to be availed by an industrial unit for a period of 10 years.

       Tax holiday: In order to give stimulus to new industries in backward regions, the 1993-94 budgets introduced a system of tax holiday for new industrial units located in backward regions i.e. in all states in the North eastern region, Jammu & Kashmir etc.

       Central Investment subsidy scheme was introduced in 1970 which made provision for outright subsidy at the flat rate of 10% subject to a maximum limit of Rs.5 lakh of fixed capital investment like land, factory buildings, plant & machinery, Latu this rate was raised to 15% & then to 25%.

       Transport subsidy scheme was introduced in July 1971, for those industrial units established in hilly, inaccessible & remote areas of the country.

       Establishment of Regional Rural Development Bank (RRDB) for the North-Eastern region.

       In order to attract private sector investment in backward region the state Government has also been offering incentives in different forms.

       These incentives include providing developed plots, with electricity & water connection on a no profit no loss basis exemption from payments of water charges, sales tax, interest free loans, exemption from payment of property taxes for initial years, establishing industrial estates for setting up small industries etc.

       Institutions that provide concessional finance for setting up industrial project in the backward areas are

       Industrial Development Bank of India (IDBI)

       Industrial Finance Corporation of India (IFCI)

       Industrial Credit & Investment Corporation of India (ICICI)


ECONOMIC DISPARITIES AND FIVE YEAR PLANS:-

Economic growth with social justice has been one of the most important objectives of the planning commission B from the fifth five year plan.

      Growth must be inclusive of all segments of the society rather than exclusive of larger sections of the society.

      Keeping in mind the goal of social equality, planning commission of India adopted different strategies during different five year plans to achieve this goal.