Answer

India’s district-level domestic product (DDP) data highlights stark economic imbalances, with output concentrated in a few urban-industrial districts while many remain underdeveloped. Bridging these disparities is crucial for inclusive and sustainable development.

Reasons Behind Economic Concentration in a Few Districts

• Industrial and Urban Clustering: Economic activity is heavily concentrated in metro cities and surrounding districts due to infrastructure, skilled labour, and established markets.
• Uneven Infrastructure Development: Connectivity, logistics, and energy availability are far superior in economically advanced regions compared to backward districts.
  Example: in Uttarakhand, three districts  Haridwar, Udham Singh Nagar, and Dehradun  collectively generate 71 per cent of GSDP, leaving the remaining 10 districts with less than 30 per cent.
• Limited Credit and Investment Access: Marginalised districts lack financial institutions and attract less private investment due to perceived risks.
• Skewed Human Development Indicators: Poor education, healthcare, and skill levels deter economic diversification and entrepreneurship.
• Policy Bias and Historical Neglect: Past industrial and economic policies favored port-based and urban regions, leaving hinterlands underdeveloped.
  Example: The first five-year plans focused on public-sector-led growth around existing urban-industrial centers.
  

Implications of Regional Economic Disparity

• Rural-Urban and Inter-State Migration: Economic stagnation in many regions leads to large-scale migration to industrial hubs, creating pressure on urban infrastructure.
• Political and Social Instability: Discontent in underdeveloped areas often fuels unrest, identity movements, or extremist ideologies.
  Example: Left Wing Extremism (LWE) zones overlap significantly with economically marginalised districts.
• Widening Inequality and Social Exclusion: Concentration of growth leads to income and opportunity inequality, worsening socio-economic divides.
  Example: Oxfam (2023) reported that the top 10% of Indians hold over 77% of national wealth, and much of it is concentrated in urban centers.
• Underutilisation of Human and Natural Resources: Backward districts often have rich resources and youth populations that remain untapped due to lack of economic integration.
  Example: Mineral-rich states like Jharkhand and Chhattisgarh remain among the poorest in per capita income.
• Barrier to National Growth and Balanced Development: Disproportionate regional development slows down overall GDP growth and undermines inclusive development goals.

Policy Measures to Address Economic Disproportion

• Promote District-Level Growth Hubs: Use the One District One Product (ODOP) and Districts as Export Hubs initiatives to promote local industries, crafts, and MSMEs.
  Example: ODOP has helped boost regional exports from Varanasi (Banarasi silk) and Moradabad (brassware).
• Invest in Connectivity and Infrastructure in Lagging Districts: Expand road, rail, internet, and power infrastructure in Aspirational Districts.
  Example: PM Gati Shakti, Bharatmala, and Digital India are targeted at bridging infrastructure gaps.
• Boost Skill Development and Education: Tailor Skill India and PM Kaushal Vikas Yojana to local economic contexts and vocational opportunities in backward districts.
• Decentralise Credit Flow and Financial Services: Expand banking and NBFC outreach in credit-deficient districts through Jan Dhan, Mudra, and cooperative banking reforms.
  Example: Mudra loans have significantly benefited women entrepreneurs in Northeast and tier-3 districts.
• Encourage Private and Public Investment Through Incentives: Provide tax breaks, viability gap funding, and PLI-style incentives for industries investing in backward regions.

Correcting DDP imbalances is essential for achieving inclusive and sustainable growth. India must move from metro-centric development to a district-led growth model, balancing efficiency with equity. By enabling underdeveloped districts with infrastructure, decentralised planning, and economic diversification, India can ensure that the gains of development are more evenly distributed across its vast geography.

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