Regional Differentiation in India: A Note

Author(s): Krishna Bharadwaj

Source: Economic and Political Weekly, Vol. 17, No. 14/16, Annual Number (Apr., 1982),
pp. 605-607+609+611-614
Published by: Economic and Political Weekly
Stable URL: https://www.jstor.org/stable/4370835
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 Regional Diff2erentiation in India
A Note
Krishna Bharadwaj

This is a preliminary sketch suggesting no more than an approach to the intricate problem of
interregional differentiation in India. It puts down certain broad and preliminary observations, based
on. secondary materials, wthich appear to have interesting implications.
The two questions that have compelled the attention of Indian economists are: (a) The
persistent slackening of the Indian economy - what some have characterised as 'structural retrogres-
sion'.- noticeable particularly after the mid-sixties. (b) T'he deepening interregion-al imbalances that are
increasingly expressing themlselves in the form of social and political tensions.
The interregional differences have their explan!ation basically in the sam.e causal forces which
explain also the overall rate and pattern of growth of the collective economy, although, no doubt, there
are conjtinctural specificities of individual regions.

AN ATTEMPT is made here to iden-
tify certain general questions and
key relationships which would provide
a setting for discussing the determi-
nants of the aggregate level and com-
position of economic activity; and
hence to understand the factors in-
fluencing the process of accumulation.
The following questions are relevant
in our view:
(a) What is the size of the reinves-
tible surplus, and how and in
what activities is it generated.
(b) How is the surplus distributed
among the productive classes
and the revenue sharers.
(c) How is this surplus utilised: in
particular, what channels is it
invested in.
(d) Whether the conditions for
productive accumulation (in
terms of adequate effective de-
mand, adequate return in pro-
ductive activities, etc) are
maintained.
Further, a sustainable process ot
accumulation leading to industrialisa-
scene. It also differed as among the
tion in a primarily agricultural country
such as ours would require broadly
separate regions of India depending
upon the locally specific economic
the following conditions to be ful-
conditions and the placement of the
filled:
region in the scheme of colonial
(i) Adequate agricultural surpluses
exploitation. Even after Independence,
would\ need to be generated and
harnessed for sustaining pro-
ductive accumulation.
(ii) Effective and adequately strong
linkages would have to develop
between industry and agricul-
ture, so that labour moves into
productive industry.
(iii) Industrial expansion will have
to be viable with adequate sti-
mulation of effective demand
for its product, on the one
hand, and provision of the
necessary supplies of wage
goods and raw materials for
non-inflationary growth.
The key relationships on which we
shall focus in the subsequent discus-
sion, therefore, are: the conditions of
production, both technological and
institutional, in which agricultural
activity takes place; the conditions for
reinvestment of the surplus into pro-
ductive channels; the interrelation
between agriculture, household indus-
try, and non-household (i e, manufac-
turing) industry, and the role of pub-
lic investment.
HISTORICAL BACKGROUND
India's developmental experience
cannot be studied without referring to
the historical fact of a protracted
colonial domination and the way the
mechanism of imperial exploitation
affected the different segments and
regions of the economy. The im-
perialist strategy itself altered, from
period to period, reflecting partly the
varying requirements of the growth of
the metropolitan economy, and partly
the exigencies of the world political
while the strategies of planned deve-
lopment themselves altered, they had
diverse incidence on different regions.
For our purpose, we may adopt
i'roughly the following periodisation
conforming to qualitative changes in
the overall growth situation, and then
discuss the regional dimension of the
problem within each:
(1) The colonial period until the
world war.
(2) Inter-war periods and after,
until Independence.
(3) Post-Independence period until
the mid-sixties.
(4) Period after the mid-sixties. it was the prime experimental base for
The first colonial phase, untfl the forced commercialisation - to convert
world war, is marked by India remain-the fertile hinterlands into providers of
ing an agrarian-plantation economy cash and plantation crops, to feed ex-
with very little of manufacturing in-
dustry. The second inter-war period
showed the beginnings of modem
industry. The third period (post-
Independence) is marked by active
public investment through plans. And
the last period is marked by a general
industrial stagnation coupled with in-
flation. Inevitably, our review of the
events in the periods would be
synoptic.
COLONIAL PERIOD UNTh FIRST WORLD
WAR
Let us first look at the conditions of
production in agriculture and the
utilisation of surplus. As is well known,
the imperial interest in agriculture was
mainly as a provider of revenue. The
surplus thus exploited was partly trans-
ferred to the home country, partly in-
vested in the military and bureaucratic
machinexy to sustain and extend terri-
torial aggrandisement, and partly to
-strengthen the sources of revenue
through public investments in railways,
canals, etc. The strategy of imperialist
exploitation changed, with the gradual
establishment of political supremacy
and with Britain itself advancing in
capitalist development. Hence major
differences arose in the way the colonial
mechanism operated in the eastern re-
gion (Bengal, Bihar, Orissa), the
western regions of Bombay and Gujarat,
the southern regions of Kamnataka and
Madras, and the north-western deltas
of Punjab.
The eastern region, the first to come
under complete domination of the
British was the base from which fur-
ther territorial expansion took place. It
thus provided the first source of where-
withal for military conquests. Secondly,

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Annual Number April 1982 ECONOMIC AND POLITICAL WEEKLY

TABLE 1-A: PERCE:NrAGE CHANGE IN ACREAGE AND YIELD PER ACiRE iN DIFFEEN-T REGIONS OF INDIA

Acreage Yield Per Acre

All Foodgrains Non- All Foodgrains Non-
Crops Food- Crops Food-
grains grains

Total Change 1891-95 to 194146

British India +16.27 +25.55 +19.84 + 6.45 - 7.31 -r52.96
Greater Bengal - 3.37 + 0.79 -29.54 -12.85 -22.17 +54.55
Madras +16.45 + 3.89 +82.95 +46.02 +30.35 +79.84
Greater Punjab (including NWFP) +51.69 +46.42 +94.38 +35.60 +19.24 +74.20
United Provinces +28.18 +27.93 +29.12 + 2.62 -8.63 +29.32
Total Change between 1921-26 and 1941-46
British India 1 5.54 + 7.08 - 0.87 - 1.45 - 9.69 +25.24
Greater Bengal + 4.87 + 6.47 - 9.71 - 7.86 -12.96 +24.45
Madras + 3.51 - 1.66 +23.61 + 0.92 - 4.99 + 9.45
GreaterPunjab(includingNWFP) + 7.25 + 7.09 + 8.48 +13.58 + 4.91 +39.64
United Provinces + 5.00 + 4.39 4 7.41 - 2.10 -14.47 +28.88
Source: Cormpiled from G'Blyn: "Agricultural Trends in India";
Patterns of Regional Growth in India during the period of the Bri

TABLE 1-B: YIELD OF CROPS IN GREATER BENGAL With the Zamindari system adopted
in some parts such as Greater Bengal,
(Yield in Rs/acre)
a number of consequences followed. A
1891-92 1921-22 1941-42 % Change between % Change between class of revenuLe collectors came up
to to to 1891-96 to 1941-46 1921-26 to 1941-46 whose primary interest was not in
1895-96 1925-56 1945-46
Average Yield Average Yield
productive cultivation. With growing
subinfeudation, usury, rising ground
Greater Bengal
rents, following increasing pressure on
All crops 371.2 351.1 323.5 - 3.37 - 12.85 + 4.87 - 7.86 land of population and pauperised
Foodgrains 353.7 316.5 215.3 + 0.79 - 22.17 + 6.47 -12.96
Non-foodgrains 470.0 583.7 726.4 - 29.54 + 54.55 - 9.71 24.45 artisans, the surplus in the region was
Tea 1571.0 2127.0 3638.0 +106.04 +137.57 11.54 71.04 diverted from the direct producers to
Sugarcane 9666.0 11592.0 13689.0 - 29.79 + 41.62 42.60 18.09 the traders, moneylenders ancd feudal
lanidlords. This meant that productive
British India
Jute 4885.0 5784.0 5664.0 21.78 15.95 4.91 - 2.08 investment in agriculture did not grow;
on the other hand, it resulted in the
Notes: (1) Acreage shift to non-fGod crops. parasitical growth of unproductive con-
(2) Negative yield growth of food-crops.
sumption and the proliferation of un-
(3) Steep rise in yield of plantation crops.
Source: G Blyn, op cit, Appendix Tables 3A, & 4-C, Quoted in A Bagchi op-cit. productive commerce. This is reflected
in the relatively poorer growth of
ports and export-based industries. The extraction of surplus from agriculture agricultural output, and of yield per
latter were predominantly under the through land revenue. It was not only acre in the region as compared to
control of European capitalists. This is a question of a heavy tax; the burden others (see Table 1 A and B). There
reflected in the fact that Bengal was was indeed greater as it was collected was very little incentive for the rentier
the principal region where export sur- before harvest and that too with a lords or for the. impoverished, over-
pluses originated and which occasionally ruthlessness which was impervious to exploited tenants, to invest in capital
made up for deficiencies in the Madras the plight of the producers or of their assets and in productive activity.
and Bombay Presidencies.' Although productive enterprise. However, the In the Ryotwati areas, although it is
treating regional export surpluses as imperial policy differed considerably true that the revenue suction mecha-
an indication of equivalent drain from from region to region, in terms of the nism was no less severe, there were
the region raises a number of dispu- types of land settlement and the extent possibly some mitigating factors: First,
table issues, it nevertheless indicates a of commercial penetration into the revenue farming being less proliferate,
substantive transfer of resources which agrarian economy. This, coupled with there was a more direct connection
is significant - particularly since the the differential policy towards public in- between the producers and the State (as
benefit of export surpluses did not vestment (in irrigation and railways) revenue collector). Secondly, there was
accrue to the region concerned. In fact, had a very diverse impact on the diffe-. also a better recognition of the legal oc-
the process of industrialisation (based
rent regions. These differences were cupancy rights and there were better
important in shaping the future patternrecords of them. Thirdly, in some re-
c.n smaller-scale manufacture, house-
and rate of industrialisation, during thegions, legal expropriation and transfer
hold industries and crafts) that was
inter-war and post-Independence years, of land rights was restricted, so that
going on was thwarted. And whatever
and the rise of the capitalist and the transfer of land from the indebted
industries were created or were allowed
financier classes in the regions. Even small operator to moneylender/trader
to grow in the region were mainly was a little more restricted. It would
after Independence, as we shall see,
subservient to the imperial interests. this legacy has continued to play an seem, then, that productive investment
No doubt, elsewhere too, the coloni important role. Hence ou. emphasis on was more attractive in these areas (for
government's prime concern was the this heritage. instance, Punjab. Madras, Bomnbay

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 ECONOMIC AND POLITICAL WEEKLY Annual Number April 1982

TABLE 2: PROVINCE-WISE DISTRIBUTION OF PUBLIC INVESTMENT IN IRRIGATION crafts - advanced much faster in the
DURING 1860-1947 eastern region, where, prior to colonial
domination, the region had attained a
(Rs million)
degree of prosperity in this respect
Period/ Punjab Bihar Madras Bombay UP Others Total The imperial connection was the
States
strongest in the eastern region, as
European capital and commerce had
1860-61 to 135 34.48 112 50 135 94.52 558
entrenched itself there, etfectively
1897-98 (24.2) (6.1) (19.7) (9.0) (24.52) (16.28) (100)
subordinating the indigeneous trading
1898-99 to 315 28.09 119 96 58 529 669 classes and financiers. The indigeneous
1918-19 (47.0) (4.2) (18.0) (14.4) (8.7) (7.9) (100) industry in the region Nwas faced with
1919-20 to 590 46.20 284 514 360 170.8 1968 a shrinking domestic market, on the
1946-47 (30.0) (2.3) (14.8) (26.1) (18.3) (8.6) (100) one hand, thanks to the declining
prosperity of the average consumer;
Note: Figures in brackets are percentages.
and, on the other hand, it had easy
Source: MVK Thavraj : "Public Investment in India".
access to neither markets nor finance
TABLE 3: ANNUAL GROWTH RATES since finance and commerce were
(percentages) geared to export-oriented activities
and markets were flooded by imported
National Per Capita Agricultural Industrial Foodgrain
goods from Britain. The region became
Income Income Production Productton Productions increasingly dominated by the poit
Ist plan (1951-56) 3.6 1.7 4.3 7.4 5.2 city, growing as an enclave.
2nd plan (1956-61) 4.1 2.0 4.1 6.6 3.9
3rd plan (1961-66) 2.4 0.1 -1.0 9.0 -2.0 By contrast, the hinterland of
3 Annual plans Bombay, where Ryotwari prevailed,
(1966-69) 4.1 1.8 7.0 2.6 9.4 presented a different picture. Here
4th plan (1969-70) 3.5 1.2 3.1 4.0 2.8
1974-75 1.0 -1.0 3.2 2.6 -5.4
there was significant suirvival of handi-
1975-76 9.2 6.8 15.2 6.0 22.0 crafts and small scale industries. The
1976-77 1.4 -0.6 -7.0 9.5 -9.0 local merchants and financiers were
1977-78 7.4 5.2 13.9 3.9 14.8 yet in better control of commerce and
1978-79 (4.3) (2.3) (4.0) (7.6) (4.0)
1979-80 (-1.5) (-3.5) (-7.5) (2.0) (-7.1) finance. And the hinterland region
was economically relatively better off
Note: Bracketed figures are provisional; at 1970-71 prices; based on index than the eastern region so that the
Numbers; Calender years upto 3rd plan and financial years thereafter. demand for indigeneous wares was not
First plan figures are for 1952-55.
yet stifled. In fact, it has been noted
hinterlands), than in the predominantly region, on the other band, the mecha- by economic historians that the class
Zamindari areas in the eastern region nism of revenue extraction operated of industrial capitalists/financiers first
(Bengal, Bihar, Orissa, Uttar Pradesh). through the fixed revenue commitmnents arose prominently in this region,
It also needs to be mentioned, at fhis of the Zamindar, and less attention was(Parsis and MAarwaris, for example),
stage, that public investment in canal paid to the growth of productivity. In The Ryotwari region of Madras, which
irrigation was also a major discriminat- fact, consequent upon the increasing also had a fair share of canal irriga-
ing factor. sub-infeudation in the region and the tion and had an ancient tradition of
Public investment in this early growth of an apathetic rentier class, trade and industry, also maintained
even the privately-owned minor irri- some steam. (The Chettiars of Madras
colonial period was directed mainly into
gation works were neglected with were well known as financiers and
the railways and irrigation. A high
detrimental consequences. In the UP, traders and had ancient connections
enough rate of return was imperative,
Elizabeth VVWitcombe's study2 brings with Asia.) Punjab had a niumber of
particularly in irrigation works. Rail-
out the many ill-effects of such neglect factors in favour of its dgriculture.
ways had a priority, as much due to
on agricultural productivity, as well as First, the average size of the cultivat-
military strategic cousiderations as due
the many pemicious consequences of ing unit in the canal colonies where
to their being the means to provide
negligent management of public irriga-land was do novo parcelled into owner-
feeder transport network for exports as
well as for the European-capital-
tion resulting in increasing s4alinity, ship plots, was much larger, and there
waterlogging, over-cropping and denu- was the consequent absence (in con-
dominated export oriented enterprises
dation of soil nutrients. More than any- trast to the eastern region) of a mass
in the port enclaves. The irrigation
thing else, was the strildng worsening of impoverished peasantry at the lower
policy was also dominated by political
of the state of the poorer sections of scales of holdings. The region, more-
and strategic considerations. The prime
peasantry and tenantry. They were most over, was favoured with massive public
motive was to stabilise and to increase
affected by the deteriorating produc-investment in canal irrigation. And,
the revenues from agriculture, with
tivity of land, on the one hand, and being a military base. a number of
less consideration for some of its con-
by the increasing hold of usury and small-scale enterprises had sprung up
sequences on the property structure.
debt bondage, on the other. Table 2 (as in cantonment townships elsewhere
First of all, the regional distribution of
shows the regional distribution of such as Meerut). There was, thus, an
public irrigation was markedly uneven:
public investment in irigation. economic base for generating effective
In Punjab where, for strategic reasons,
canal colonies were set up, there was Furthermore, the process of de- demand in the region. The region
considerable investnent mi irrigation. industrialisation - i c, the slow had no cities, however, comparable to
In the Zamindari areas of the Eastern decline of household industries and the port-cities of Bombay, Calcutta

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 ECONON11C AND POLITICAL WEEKLIY Aninual Number April 1982

TABLE 4-A: RANKiNCG OF STATES Regionally speaking, a pattern of

'agglomerated' growth emerged, with
islands of concentrated growth but
Per Cap:ta NDP having very weak dispersal effects.

1950-51 1955-56 1960-61 1964-65 1969-70 The situation also was markedly dicho-
tomous -v reflecting the, disjunction
AP 9 10 7 6 10 between agriculture and industry. The
Assam 5 5 5 5 7 port-enclave manufacturing centres,
Bihar 14 14 14 14 14
like Calcutta, were growing fast even
Gujarat 3 4 3 3 2
Karnataka 7 7 8 8 8 as the hinterland agrarian and tradi-
Kerala 6 6 9 9 5 tional industry. was deteriorating. On
MP 13 9 11 -Il 12 the other hand, regions with relatively
Maharashtra 4 2 1 2 3
prosperous agricultural growth like
Orissa 11 13 -13 13 9
Punjab 2 3 4 1 1 Punjab had no major industrial centres.
Rajasthan 1t 11 10 12 13 As late as in 1948, the Presidency
Tamil Nadlu 12 8 6 7 6 states (Bombay, Madras and Calcutta)
UP X 12 12 10 11
accounted for 76.7r per cent of the
West Bengal 11 2 4 4
total industrial workers, 77 ocr cent
of the total value of industrial produc-
TABLE 4-B tion, 82.2 per cent of the value of
engineering and electrical goods, and
87.2 per cent of the value,of chemical
High Income States (first Five) Lowest Income (Five States) goods in the country. The correspond-
(descending order) (ascending orders) ing figures, for the minerally rich states
1960-61 1964-65 1969-70 1960-61 1964-65 1969-70 of Bihar, Orissa, M P, were 9.61, 9.54,
104 and 5.1, respectively, showing
West Bengal Punjab Punjab Bihar Bihar Bihar how little the 'natural endowments' of
Punjab Maharashtra Gujarat MP Orissa Rajasthan the region mattered in this respect.3
Gujarat Gujaxat Maharashtra Tamil Nadu Rajasthan MP The southern region around Madras
Maharaslhtra W Bengal W Bengal Orissa MP UP
and Bombay, and especially what
Assam Assam Kerala Rajasthan 'UP AP
became later the state of Gujarat, was
better placed and had a better start
and Madras, or even large traditional While new townships came up in terms of both agriculture and
metropolitan centres. such as Ahmedabad, whose base was industry.
textiles, and Jamshedpur,- where the
THE NTAER-WAR YEARS first steel complex was built, develop-
POST-I1NDEPENDENCE PkEIroD
ment remained basically of the port-
With the changing political setting enclave type in the periphery of
during the first decades of the 20th Let me turn now to the pictu.e that
Madras, Calcutta, and Bombay. The
century- and the situation of global emerges after Independenice. We have
decay of traditional industries,
wars - as also with British capitalism spent much time on the colonial period,
especially in the eastern belt, led to
entering the phase of high finance as it was important in laying the
the slow decline of urban settlements
czapital-- some protection wa, afford foundation for subsequent develop-
such as Dacca, Murshidabad and Surat,
ed to Indian industrialisaLion. The ments. it will be observed that the
Industry did not spread from the port-
pace and pattern of developmen-t was, enclaves, or even from the nodal faulty foundation introduced funtdla-
Io( doubt, still under the imperial mental weaknesses in the structtire
points in the sparse interior centres,
hegemony and was subserviant to the erected thereupon. We have chosen
and failed to attract labour to any
priorities of the Empire. While the to divide the -postlnIndepcndence period
substantial extent away from agricul-
cstablishment of basic intermediate into two the first; until the mid-
ture.
goods industries, such as steel, was . sixties when public investment was
haltingly approved, there were hardly Thus the process of industrialisation, active, guided by a more or less
any capital goods industries. Consumer ing this period, was not only weak but vigorous planning process; and the
.goods industries which had a traditio- was also distorted. There were no capi- second, the period thereafter, v. hen
nal home market were allowed to grow. tal goods or basic industries worth the public investment lost its thrust and
Their competitiveness, too, was name, and industry was severed from planning proceeded. haltingly. Table 3
hampered by restrictions on trade. It its linkages with agriculture. Neither provides an overall view of the
is not surprising that Bombay and 'backward liikages' nor 'forward econom.y's rather uneven perforinance
Aladras regions benefited the most in linkages' were powerful in terms of over plan periods (and in the planless
terms of the rise of manufacturing units. diversification of consumer goods *years).
These regions had maintained a- better industries, India was dependent on
organised indigeneous class of capital- imports - particularly imports from Over the plan periods, nio doubt.
ists and financiers who had better Britain of both basic capital goods as the strategy of industrialisation
hold over the domestic markets. The well as many consumer goods. A varied. A most important change, in
eastern region, as we ha-ve already 'dualism' was introduced between the terms of industrial breakthrough,
seen, suffered more from the imperial- traditional agriculture anc the islands came in the second plan, when a
ist penetration aind the c')ntrol of of manufacturinig centr-s -- at feature
concertedl mov e wals madle tu buildz
Luropean capital and trade. that lhas continued ceve sinice. up basic indeustries anld to locate thleni

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 ECONOMIC AND POLITICAL NVEEKLY Annual Number April 1982

TAFt E 4-C: PEP, CAPITA CONSUMPTION (RURAL AND URBAN)

f iI1>r Fif i (&: cending ord?r)

1957-58 1960-61 1963-64

A R U A R U A R U

Punjab Punjab Asram Punjab Punjab Assam Punjab Punjab Assam

Assam Assam WB WB J & K WB WB J & K WB
Rajasthan Rajasthan Bombay Assam Bihar Punjab J & K Assam Bombay
J & K J & K MP Bihar Assam Bombay Assam Rajasthan Punjab
WB Karnataka Punjab J & K Rajasthan Karnataka Rajasthan WB3 Rajasthani
Lowest five (ascending order)
Orissa Orissa Karnataka Orissa Orissa Orissa Orissa Orissa Karnawaka
TN TN UP Kerala Kerala Kerala Kerala Kerala Kerala
Kerala Kerala J & K MP MP J & K Bihar AP AP
AP AP AP TN TN Rajasthan AP Karna : aka UP
Bihar Bombay Kerala AP AP AP Karnataka Bihar Bihar
Source: For Tables A, B, C : Based on K R G Nair: "Inter-Stafe In

TABLE 4-D: PER CAPITA INCOME BY STATES Looking aggregatively at state-level

statistics,4 and taking the periods
(Rutpees cutriren t prices)
1950-51. 1964-65, 1969-70 (see Tables
1970-71 1975-76 4 A and B) it is clear that the first four
states, in terms of the highest per
Rs l000andabove Punjab (1067) Punjab (1688) capita net domestic product, continue
Harayna (1514) to be West Bengal, Punjab, Gujiarat
Maharashtra (1455)
Gujarat (1236)
and Maharashtra. Assam, wvhich was
HP (1165) in the first top five states in 1950-51
W'B (1 100) and 1964-65, has lost its rank to
Karnal aka (1038)
Kerala. Table 4D shows tizat, since
Kerala (1000)
the 1970s, Puniab, Haryana, Gujarat
Rs 750-1000 Haryatia (932) Tamil Nadu (997) and Maharashtra occupy the first fotur
Gujatat (845) Nagila nd (949) places while West Bengal is Co11tinUOuS-
Mfahalrashtra (811) Manipur (904)
l losing in rank. Bihar continues to
Meghalaya (899)
AP (897) be at the bottom of the scale, while
Rajasthani (873) Rajasthan is showing continuous
Tripura (872)- deterioration in its rank order. Tamil
Assam (848)
Nadu appears to have been gaining
Orissa (834)
J & K (825) ground in the 'sixties and thereafter.
MP (790) Looking at per capita consumption
levels (see 4C) comparing the figures
Rs 650-750 WBI (729) UP (727)
HP (676) Bihar (669) for 1957-58 with those for 1960-61 and
Karnataka (675) 1963-64, we note that Punjab holds
pride of place: West Bengal, Assam
Below Rs 650 Meghalaya (644)
Kerala (636)
and Raiasthan remaining in the top
Rajasthan (629) five brackets while Orissa lurks at the
TN (616) bottom of the rank-order, along with
AP (586) Bihar, Andhra Pradesh, Kerala and
Asam (570)
Tripura (563) Tamil Nadu. There is, thus, no
J & K (557) necessary correspondence between the
Orissa (541) ranking according to per canita net
Nagaland (508)
product, and that according to per
UP (493)
MP (489) capita consumption. What is even
Bihar (418) more striking is that there is also no
Manipur (408) correspondence between the rank-
ordering of states according to per
Source: Compiled from Central Statistical Organisation d.ta.
capita rural and urban levels -- a fact
which possibly reflects the dis junction
in the interior. It was hoped that generated little development of sub-
between agrarian and industrial growth.
these major industrial complexes would sidiaries in their vicinity anid that
For example, while West Bengal and
act as nodal points from wh;!re growth engineering industries tend yet to con-
Bombay (later divided into Gujarat
would spread out. However, as we ccntrate in the areas proximate tC
know, industrial development remained Ca!cutta. Of course, some new interior and Maharashtra) appear in the top
concentrated in the traditional port- centres have emerged, but the domi- five brackets of urban consumption,
cities and their periphery. It is interest- nance of Madras, Bombay and Calcutta they are way down in rural consump-
ing that industrial eomplexes, like and of their hinterland is not effective- tion in the earlier years. The reverse
Bhilai and Durgapur, appear to have ly reduced. is the case with Jammu and Kashmir

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 Annual Number April 1982 ECONOMIC AND POLITICAL NVEEKLY
TABR-rm - ANNuIAL COMPuOND CnowvTm RATE: 190-73 OVER
Area OuitpuLt Ranik Yield Rank
AP -1-.11 -0.98 16 0.13 15
Assam 1:90 2.3 I I 0.3i 14
Bihar 0.52 1.52 14 1.47 11
Gujarat 0.22 4.50 5 4.25 5
Haryana 1 .22 7.88 2 6.58 2
HP 0.46 3.36 7 2.87 8.5
J & K 0.32 5.80 3 5.45 3
Karnataka -1.88 2.45 10 4.41 4
Kerala 0.90 2.15 12 1.24 12
MP 0.68 1.63 13 0.94 13
Maharashtra -0.97 -4.89 17 -3.96 17
Orisa 0.63 -0.61 15 -1.23 16
Punjab 2.67 10. 42) 1 7.54 1
Rajasthan 1.33 4.72 4 3.37 6
Tamil Nadu -0.01 2.87 8 2.87 8.5
UP 1.10 4.30 6 3.15 7
W Bengal 0.42 2.74 9 2.33 10
Soutrce: G S Rhalla and Y K Alagh:
Districtwise Study" (Sterling, 1979).
where, of course, urboanisation is very
ta r dy
These aggregative state-level facts
ar e only indicative, since the pattern
of growth has been uneven amliong
different districts of the same state
a classic case being that of western
and eastern par:s of the UP. Differen-
tiation has occurred in terms of both
agricultural and industrial growth. A
study of regional disparities by K R G
Nair (op cit), maintains that, while
there were some tendencies tF wards
narrowing disparities between 1950-51
and 1960-61, the same -cannot be saicd
for the period between 1960-61 - and
1970-71.
This is not surprising if we notice
that public investment had slackened,
after the mid-sixties and that private
investment has also been tardy. The
tardiness of private investment has
been ascribed to various auses: in-
frastructural bottlenecks, defticiency of
effective demand, deteriorating situa-
tion of world markets, and slackening-
of public investment with which it
bears a strong complementarity. The
strategy of export-led-growth which
has been advocated in the face of tardy
growth of home markets is frustrated
by the shrinking world trade, increas-
ing trade barriers, increasing cost of
crucial imports, etc.
Differentiation among regions - has
also occurred in agriculture with the
uneven impact of the 'green revolution' of Karnataka and Andhra Pradesh.
after the mid-sixties. First of all, the
green revolution', which made an
initial impact by generating a high
level of growth, alppears to have
tapered off and its tempo has not been
sustained. -econdly, .ts impact was
felt mainly on wheat and less so, on
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1962-65
irrigated districts of Punjab ancd wvest-
ern UP. Leaving these, a large part
of India is characterised by- medium,
low, or even regative rates of growth.
A large number of districts located in
the Gaangetic plains of east UP, Bihar,
West Bengal fall in this category. The
high productivity regions in the south
hav also-tapered off in growth rate.
while some parts of Bihar and Orissa
show actual deceleration.
The agricultural performance and
the ,,eneral state of welfare in the
regions is reflected, as- we have seen,
in per capita incomes and constump-
tion -levels. Punjab and Haryana -
regions of high productivity and high
growth show also high per capita
net product "Performanc
and consumption, while
West Bengal, Bihar, Orissa, with their
deteriorating conditions in agriculture,
rice. We see from a recent studys show poor levels of income consump-
that Punjab and Haryana recorded1 a tion. What is interesting too is the
remarkable growth of output and yield differences in the spectrum (f con-
per hectare while. Orissa, Maharashtra sumption levels within- the region.
and Andhra Pradesh are -decelerating Precisely the regions where the -overall
with negative growth rates. (Table 5). rate of growth of agriculture -is low
Its benefits appear to have accrued to are the regions with greater disparities
the districts vithin states where there in consumption levels Ind vith greater
was either good rainfall or there was mass of Deople in the lowest bracket
irr igation already existent or createdof consumption expenditures. Gujarat,
by private investment. The new Haryana and Punjab have relatively
technology thus appears to have been smaller proportions of their population
adopted and more widely used in in the consumption expenditure
regions where the general level of brackets (as seen in Table. 7).
well-being of producers was already The uneven nature of agricultural
relatively high. development is also evident from other
In the two-way Table 6 is showvn indicators, such as fertiliser conswnp-
the distribution of districts ( in num- tion, percentage area irrigated (see
bers) according to the initial level of Table 8). It is evident that Punjab
productivity per hectare, as in 1962-65,and Haryana have shown remarkable
and the rate of growth annually com- up thrust with all-round development
pounded, between 1962-65 and 1970-73. in the rural sector. Not only were
The Table brings out the unevenness larger agricultural surpluses grmerated,
of growth-and of initial levels of pro- but they were directed into p-oductive
ductivity, as among districts, within investment. It would seem that the
the same state. Looking at levels of facts of the relatively higher average
productivity, the same study shows level of living and a higher average
that the highest levels are found in size of the cultivating unit with smaller
coastal plains, including inner parts of proportion of cultivaltors weiAhed
Tamil Nadu and some -small parts of under distressful poverty have helped
West Bengal, Assam, and north -western the channelling of the agricultural
parts of Punjab and Harvana. The surpluses into more productive avenues.
lowest productivity areas belong to (A the word of caution, however; we do
western, central and southern arid not intend to draw a flawlessly rosy
zones of India - viz, western Rajas- picture; for, tlhe persistence of usury
than, sonme parts of Gujarat, Madh-a and the reappearance of, bondaQges in
Pradesh and Maharashtra, some parts di-fferent forms,- at least in some parts
of this prosperous zone is not to be
These are areas of uncertain rainfall mtnimised.) Our statemznts concern-
and of no assured irrigation. However, ing the region's 'bright' record .ire to
the highest rates of growth have be understood entirely in relati.vist
occurred in dry areas where irrigation terms. -They shine onily in comparison
has been -introduced on a major scale, with the utterly dismal record of
kle Rajasthan, Haryana and Gujarat. region}s such as the easstern UP Bihar",
The other fast-growing regions are the and parts of Orissa and West Bengal.
ECONOMIC AND POLITICAL WEEKLY Annual Number April 1982
T3BiF K- , DIiTPIBUTION OF DISTRICTS 1t; VAR!k-)Wc STATTES ACCORDING TO YIELD LEVEL
CG\oRoiTH RATE BETWEEN 1962-65 ANTD 19, 0-73

(No of districts shown in brackets)

Yield Lev,l/Growth Rate -4.5 Per Cent 1.5-4.5 Per Cent 0.0-1 .5 Per Cent Less tharn 0.0 Per Cent
Above Rs 1300'hectare Karnataka (8) AP (2) AP (1) AP (3)
Punjab (2) Assam (I) Assam (1) Karnataka (3)
Tamil Nadui (2) Gujarat (1) Kerala (3) Maharashtra (2)
UP (3) Karnataka (8) Maharashlra (2). West Bengal (1)
Kerala (4) Tamil Nadu (3)
Tamil Nadu (4) West Bengal (1)
UP (1)
West Bengal (6)

Rs 700-1300/'hectare Assam (1) Assam (3) AP (2) AP (5)

Haryana (3) Bihar (5) Assamr (2) Bihar (6)
J & K (I) Gujarat (2) Bihar (3) Gujarat (3)
PLnIlj1b (9} Haryana (2) Gujarat (4) MP (2)
UIp (6) HP (1) Karnataka (4) Maharashtra (4)
Karnataka (3) MP (3) Orisa (8)
MP (3) Maharashtra (1) UP (1)
Rajasthan (2)
Tamil Nadu (1) Orissa (3)
UP (22) Rajasthan (1)
West Bengal (7) Tamil Nadu (2)
UP (10)

Below Rs 700/hectare Gujarat (4) Gujarat (2) AP (1) AP (3)

Haryana (2) MP (22) Gujarat (1) Bihar (1)
J & K (1) Raasthan (6) Karnataka (1) Gujarat (1)
Karnataka (3) UP (5) Rajasthan (3) Karnataka (3)
Raiasthani (12) UP (1) J &K (1)
Souiirce: Based on G S Bhalla and Y K Alaph, op c=r.
TkBLE 7: PERCENTAGE DISTRIBUTION
OF HOUSE-HOLDS BY MONTHLY PER
CAPITA EXPENDITURE BRAcKEr,
OCTOBER 1973-JuNE 1974 (RURAL)
(in rupees)
0-21 21-43 43 and
above
Gujarat 1.3 31.7 67.0
Haryana 0.7 20.7 78.6
Punjab 0.5 12.5 87.0
All-India 3.7 37.9 58.4
West Bengal 8.9 45.9 45.1
Bihar 4.2 32.2 63.3
Orissa 7.6 53.4 31.0
Souirce: National Sample Survey:
28th Round, October 1973-
1974. -
How does the process of indcustrial-
jsation appear fromi a regional per-
spective? Mention has already been
made of the unsuccessfull attempt at
genera ing growth in the backward
regions through creating industrial
complexes. A recent study6 h.-,s some
revealing observaticns to make on
the pattern of growth that has emerg-
ed during 1961-71. This study has
used NSS regions for its purpose. It
finds that, of the 58 regions, only
two - viz, costal Maharashtra and
the central plains of West Bengal
account for about 32 per cent of the
total non-household manufacturing
employment. These are followed by
five regions in a descending order:
Gujarat plains, southern Kerala,
coastal and inland Tamil Nadua, and
western UP, each accountiing for
more than 4 per cent of the total
manufacturing employment. Even
more striking is the fact that 89 and
75 per cent of the non-household
industrial workers in the Mahlarashtra
<nd West Bengal regions are in class I
towns (i e, exceeding one lakh in
population). More than 17 pcr -cent
of the total non-household nmanufac-
turing employment is thus concen-
trated in the per.pihery of Calcutta
and Bombay. A disconcerting fact is
thut the share of non-hous;ehold em-
ployment in the town3 has gone do-inand towns of these regions where the
(during 1961 and 1971) relatively to household sector is losing out.
that of cities. Also, while the cities
of Saurashtra, inlaad Ka,rinat-ak a,
c-ntral plains of West B.nzal show
a rise in share, those in the western
plains of West Bengal, southern UP,
and northern Bihar have experienced
a ciecline.
Turning to household industries,
the percentage of workers employed
in them havo declined from 6.4 to 3.5
per cent between 1961 and 197 1.
What is noteworthy is that regions
MP (5)
Maharashtra (17)
Rajasthan (2)
with a high percentage of wvorkers in
non-household industries such as
Gujarat plains, coastal Maharashtra,
northern Orissa, inland eastern Kar-
nataka) have very little share of the
work-force in household employment.
The reverse is the case of regions
like eastern UP, some regions of
Tamil Nadu, and Madhya Pradesh,
where a relatively active hotisehold
sector exists but where there is hardly
any significant non-household manu-
facturing activity. What is alarming,
however, is that an absolute decline
in household employment occurred
between 1961 and 1971 in regions
covering large parts of Bihar, Orissa,
eastern region of West Bengal where
the non-household manufacturing
sector is weak. It is in the villages
The same study also throws some
light on the two broad patterns that
appear to be emerging: One, the
pattern of -agglomerated growth,
based on generally capital-intensive,
large-scale manufacturing units
located in a few cities; and second,
the 'disperSed' pattern, where growth
is relatively dispersed in small towns
and rural settlements. Suitable
indices are compositely constructed to
measure these. The findings of the

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 TABLL 8: INDUSTRIAL INDICES OF STATES
D.-;ilv Grass Irrigated Feitili:;er Ele^tric ty
State Fa-vt0iv Factory Area as 0 Cons-,m- Consum-
Ernp)vilcmnt' Output of Cropped pion Per ptn Per
Per Per Canita Area Hectare, Carita
1000 (1976-77) (1975-76) 1978-79 (1978-79)
Ponulation (Rs) (Kg) (KW)
(1977)
Andhra Pradesh 8.2 397 34.9 46.3 112
Assam 4.0 310 18.0 2.4 42
13ihar ' 5.4 323 29.8 17.2 69
Gujarat 18.2 1187 15.0 31 4 264
Haryana 13.2 778
Himachal Pradesh 4.0 166 16.6 13.0 81
J&K 3.3 90 40.2 20.7 125
Karnataka 14.6 423 15.3 32.3 189
Kerala 11.7 425 9.2 33.4 122
MP 7.6 317
Maharashtra 19.3 1486 11.0 19.4 268
Orissa 3.3 241 19.2 9.3 117
Punjab 9.8 800 73.8 94.8 373
Rajasthan 3.6 258 17.1 7.7 119
TamilNadu 1-0.8 772 46.7 68.1 219
UP 5 5.1 247 40.2 45.5 108
WB 16.2 741
study are: that city-based industrial
development is found to be localised
in the following six regions : (1)
Calcutta conurbation (2) Madras
canurbation; (3) Bombay-Gujarat con-
urbation; (4) Delhi metropolitan
region; (5) Jamshedpu4-Dhanbad-
Bokaro complex (6) Ludhiana-Jullun-
der complex. The first three reflect
a continuation of the historical legacy
of port-enclave development. The
additional feature is the absorption of
the Gujarat region withWn the shadow
of Bombay (We shall have somcthing
more to say about this very shortly).
The fourth, the Jamshedpur-Dhanbad-
Bokaro complex, too, has historical
roots in the colonial period traceable
to the establishment of the steel mills
in Jamshedpur. But the complex has
been widened and strengthened with
the massive public investments in
Bokaro and Dhanbad. Delhi owes its
growth mostly to public investment
and is basically a tertiaryv-activity
complex, an outgrowth of the services
sector feeding the capital. The sixth
region, Ludhiana-Jullunder, is a new
development - although the region
was known even earlier for its army-
based small sector. It is now situated
in the heartland of the green revolu-
tion and draws its sustenance greatly
from the surrounding agricultural
prosperity. As distinguished from
these agglomerated-growth regions,
certain parts of AP, Kerala and
Karnataka in the south, Haryana in
the north, and Gujarat and parts of
Maharashtra, have shown prominently
dispersed growth. Kerala, with its
continuous settlements, has come up
particularly with dispersed industries
and its advance in this matter is
reflected in its improved position in
recent years in terms of per catpita
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50.3 37.4 265
8.8 9.0 106
19.4 30.6 147
output and consumption levels. A
remarkable instance is that of Gtliarat
which has shown growth patterns of
both kinds - the city-based agglo-
merated growth as well as dispersed
growth in smaller towns and villages.
Bringing together our observations7
on agricultural and industrial growth
in its regional perspective, what broad
generalisations can be offered? First,
we note the importance of agricultural
surpluses in adequate quanta to sus-
tain industrial expansion. The r6gions
sharing some industrial vitality appear
to be the ones where agricultural
growth has also been promising. We
further note that an important pre-
condition is that surpluses are
productively reinvested. Public invest-
ment appears to have played an im-
portant role historically in supporting
agricultural growth and generally sup-
porting an environment- for productive
channelling of surplus. An even more
important precondition for productive
utilisation of surplus and for forging
a link between agriculture and indus-
try appears to be a general level of
uwell-being, which we have seen as
roughly indicated in per capita con-
sumption levels and by a smaller
proportion of households in the
lowest brackets of household -con-
sumption. Those areas where not
only has the agricultural growth rate
been favourable but also where the
'general level of well-being' in the
above sense has been relatively higher,
as in Gujarat and Haryana, we observe
a higher industrial activity. We mav
interpret this association between
better agricultural performanc2 and
higher level of well-being, on the one
hand, and higher industrial perform-
ance, on the other, in the following
way: If the region is afflicted by a
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deadweight of utter poverty, the
situation offers breeding ground for
exploitation through usur y, sDeculative
trading, commercial exploitation , etc.
All of these divert surpluses into
unproductive channels and create
relative advanta-e favourin- such
operation3. TIhe preponderance of
such 'Lunproductive' uses of surplu -
implies a perverse system of 'social
subsidisation' 8 under which the
process of pauperisation continues
every as the surplus is diverted into
unproductive channels. Secondly, if
the general. level of living is reason-
ably high, it creates an effective
demand for the products of the
industry. The emergence of Harvana-
Gujarat on the industrial map, parti-
cularly in their 'dispersed' pattern of
industrialisation, appears to reflect
partly this situation. In c ontrast,
Bihar, Orissa, eastern UP, parts of
Rajasthan, IP, appear to !lustrate
the contrary case of retardation.
Notes
[This article is based on the author's
Mathew Memorial Lecture delivered
at Bangalore in December 1980.]
1 See A K Bagehi: "Reflections on
the Pattern of Regioinal Growth in
India During the Period of the
British Rule,", (Mimeo, 1978).
2 Elizabeth Whitcombe: "Agrarian
Conditions in Northern 'India,
United Provinces under British
Rule 1860-1900", Thomson Press,
New Delhi, 1971.
3 These statistics are taken from an
as yet unpublished research study
conducted at the Centre for
Regional Development, Jawaharlal
Nehru University, directed by M
Raza and A Kundu, cntitled "Re-
gional Disparities in India" (ICSSR
Project, submitted 1980).
4 We have here relied on the esti-
mates by K R G Nair in "Inter
State Income Disoarities in India
1950-51 to 1965-66".
5 G S Bhalla and Y K Alagh:
"Performance of Indian Agricul-
ture - A Districtwvise Study"
(Sterling, 1979).
6 Quoted in footnote 3 above.
7 In this sketchy note, no attempt
has been made to closely scrutinise
comparability of, or probe deeper
into, the Statistical evidence put
together from diverse sources..
8 The term 'social subsidisation' is
used here in a specific sense. From
the viewpoint of macro-level real
flows, a nart of the s-urplus is
diverted to bairely sustain a section
of population, in the form of con-
sumption loans. However, the
system throughi which these flows
operate is doubly pernicious:
First, it does not usually work
towards enhancing the productive
potential of the ponulation so
sustained and, probablv, even
works to the contrary. Secondly,
it diverts reinvestible 'surpluses
from directly productive uses.