Discuss the reasons and extent of regional disparity in India. What role has been played by Finance commission to fill the gulf of regional disparity?

Published: February 7, 2016

Model Answer:
Regional imbalances in a country may be due to unequal distribution of natural resources and/or man-made in the sense of neglect of some regions in Government Polices / Planning/ Economic Liberalization etc. In India, apart from uneven distribution of geographical advantages, historical factors have also contributed to regional inequities. 
Various economic and social indicators confirm the higher level of inter-state disparities in India. States such as Maharashtra, Gujarat, Tamil Nadu, Punjab and Haryana, show district and regional disparity. Maharashtra is one of the most developed states in India but maximum numbers of farmers have committed suicides over there. On the other hand north-eastern states of the country despite of having high natural resources suffers from poverty and employment due to lack of proper economic planning.
Finance commission plays an important role in reducing regional disparity within the country. The sharing of Personal Income Tax and Excise duties collected by the Centre with the States is periodically reviewed by the Finance Commission appointed every five years as per mandate of Constitution via Article 280.The Commission also decides the principles and the formula by which the allocable funds are to be distributed among the States. India’s successive Five Year Plans have stressed the need to develop backward regions of the country and promoting regional balanced development.

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