Not all states have reacted equally fast to economic reforms. Since reforms also imply that state-level policies become increasingly important and central ones less so, there is the question of enhanced inter-state and inter-regional disparities. Not all states are in a position to attract capital (domestic or foreign) equally well, especially because investments are more a function of infrastructure, procedures and labour issues, rather than fiscal incentives.
Nor have all states improved public delivery systems sufficiently to impact on physical quality of life indicators. States with question marks against them are Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, Orissa and West Bengal, or at least, some districts within these states.
Consider the figures given in Economic Survey 1998-99, based on the Census of 1991. As against the all-India female literacy rate of 40 per cent, Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh, have literacy rates below 30 per cent. As against an all-India infant mortality rate of 71 per thousand, Madhya Pradesh and Orissa have infant mortality rates of around 95, with Rajasthan and Uttar Pradesh at 85. There are bullish sentiments about India for the next 20 years.
With the rate of population growth at around 1.5 per cent and a real gross domestic product (GDP) of 7 per cent, the higher real per capita GDP growth will impact favourably on the percentage of population below the poverty line and physical quality of life indicators. But with crude birth rates still in excess of 30 per thousand in Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh and growth in these states uncertain, an overall improvement for the country can occur simultaneously with negative real per capita income growth in some of these states.
The National Council of Applied Economic Research (NCAER) has brought out a human development report for all of India, unlike the specific ones for Madhya Pradesh and Karnataka. This documents increased regional disparities, be they in terms of average annual wage income for households or literacy rates and quality of health services. Three out of five adults dont have a job in south India.
But five out of seven adults dont have a job in Rajasthan, West Bengal and Uttar Pradesh. Can there be a policy to tackle increased inter-regional disparities? Fiscal incentives in favour of poor and backward districts or states have not worked.
One can argue that such increased disparities are perhaps desirable. Otherwise, how will delinquent states learn that inappropriate policy environments are not conducive to growth and its trickle down benefits? During reforms in China, such heightened disparities also characterised the southern coastal provinces vis-
