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MORE MARKETS, LESS GOVERNMENT
all the states in backward categories are
having PCCE which is less than Rs.1000.
The lowest among them is Bihar with
only Rs.696.27 and highest PCCE is
earned in Uttar Pradesh (Rs.964.02). In
comparison to backward states, the lowest
PCCE stands at Rs.1018.55 and highest
at Rs.1148.27 (Maharashtra).
Total Cases Of Foreign Direct
Investment
FDI influences growth by increasing total
factor productivity and, more generally,
the efficiency of resource use in the
recipient economy. Technology transfers
through FDI generate positive externalities
in the host country. FDI contributes
to export growth, productivity
growth and finance for balance of payments;
it supports increase in national
income. FDI increases employment and
contributes to economic growth. FDI
has increased manifold over the past two
decades. FDI brings private overseas
funds into the country for investments.
Under the new Industrial Policy Resolution
the industrial policy reforms have
substantially reduced the industrial licensing
requirements, removed restrictions
on expansion and facilitated easy
access to foreign technology and foreign
direct investment. Foreign Direct Investment
in India is allowed on automatic
route in almost all sectors. Table-
3 will help us in explaining the much
widening of regional imbalance
throughout India. As it is evident from
the table, the cumulative numbers of
FDI cases are lowest in the state of Bihar(27),
followed by Orissa (91) and
highest in the state of Maharashtra with
3743 and seconded only by Karnataka,
with 2147 cases. That means the total
Table-3 Total Cases Of FDI In Select States Of India
Total Cases of FDI
States Aug 1991-Dec 2004
Forward Group Number Investment in Rs Cr
Andhra Pradesh 1026 11634.44
Karnataka 2147 19096.39
Maharashtra 3743 37107.79
Tamil Nadu 2066 22651.29
Total FG 90489.91
Backward Group
Bihar 27 739.71
Madhya Pradesh 170 9271
Orissa 91 8229.31
Rajasthan 241 2911.21
Uttar Pradesh 536 4836.56
Total BG 25987.79
Source: http://eaindustry.nic.in/handbk0305/chap143.pdf
gap between the highest and the lowest regions of the country. This has enabled
is almost 3716 cases and this depicts the the developed regions to achieve accelerated
economic growth during the
clear case of wide regional inequalities.
Again, the total investment in aforementioned
backward states is only 28.7% of which were unable to attract any signifi-
1990s. Backward regions of the country,
the forward states. Ever since reforms cant private, experienced decelerated
started, a great majority of FDI is directed
only into select states which al-
The issue of regional balance has been
economic growth during this period.
ready had good standard of living. The an integral component of almost every
flow of private investment, both domestic
and foreign, has been extremely bining
and a strategy of State-led industri-
Five Year Plan. The adoption of planased
in favour of the more developed alization, with Plans and policies designed
to facilitate more investments in
the relatively backward areas were intended
to lead to a more balanced
growth in the country. It was expected
that, over time, inter-state disparities
would be minimized. An analysis of
these trends, especially the more recent
trends (after 1991), leads to the inevitable
inference that, regional disparities
still persist and in some indicators it has
widened more especially after reform
THE INDIA ECONOMY REVIEW
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