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REIMAGINING INDIA
period. Also, there are others parameters
like number of bank branches
and credit deposit ratio which are showing
the same trend of accentuating
inequality.
Policy Payoffs!
Thus, it is clear from the above discussion
that mere free market forces and
mechanisms will not help in improving
the overall condition of Indian economy.
Government has to work side by side and
even equally with the private sector, in
addition to the policy incentives aimed
at private bodies for attracting the requisite
investments in backward regions.
But as reflected in the data, they did not
work properly because of other reasons
like poor social capital and weak economic
conditions in backward states.
There is, arguably, a greater need for
higher levels of investment in social
services and infrastructure, specifically
in relatively backward states as compared
to the more developed counterparts.
The state governments of the
backward regions tend to be fiscally
weaker and are therefore unable to find
enough resources to meet the huge investment
requirements needed to catch
up. Therefore, if possible government
should concentrate in developing backward
regions and let private bodies concentrate
on forward states and areas. In
addition to this macro policy approach,
there are several other direct and indirect
measures which the state can think
over. It will require Herculean tasks on
the part of the Centre and the leadership
in the concerned regions to ensure that
the gap does not widen further.
In order to reap the maximum benefits
from FDI, there is a need to establish a
transparent, broad and effective enabling
policy environment for investment
and to direct these capital flows into the
areas where it is required most.
References
• http://planningcommission.nic.in/
midterm/english-pdf/chapter-18.
pdf
• http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/81450.pdf
• http://www.iht.com/articles/2007/04/19/news/fdi.php
• http://www.mospi.nic.in/mospi_
nsso_rept_pubn.htm
• http://www.nyu.edu/projects/ollman/docs/china_speech2_content.
php
• http://www.rba.gov.au/PublicationsAndResearch/Conferences/2002/
kishore.pdf
• http://www.rediff.com/money/2007/mar/21poor.htm
Our Weapons of Mass Instruction
66 THE IIPM THINK TANK