Development directions

Regional disparities in Andhra pradesh, and the implications.

THE stubborn persistence of regional disparities has always been a problem for mainstream economics. Neoclassical economics typically predicts that markets correct such disparities. This is why, for example, it was argued so confidently that free movement of goods through trade and capital would lead to convergence of incomes across countries and regions of the world.

When it becomes painfully obvious that this does not happen, and that existing disparities tend instead to increase through patterns of trade and investment, the response has usually been to suggest that the free functioning of markets has been impeded by all sorts of misguided government regulation. In terms of the international economy, it is often easier to cloud the picture because the world can be easily broken up into constituent countries, with associated difficulties of ensuring cross-border integrated markets.

However, it is the case that even within national boundaries, regional disparities tend to persist, and sometimes even to increase, across a range of important economic and social variables. Once again, political dividing lines of some sort are often put forward to explain this. In India, the federal system of government, which gives some degree of power and limited autonomy to State governments, can be adduced to argue that this contributes to the variation in income and growth across States and the failure to achieve an integrated "national market".

But, in fact, it turns out that there are huge, and often increasing, variations in economic variables even within States. This is something that tends to be inadequately studied, especially in India. So a new book edited by Y. V. Krishna Rao and S. Subrahmanyam (Development of Andhra Pradesh 1956-2001: A study of regional disparities, NRR Research Centre, Hyderabad, 2002) is particularly welcome. The book is a collection of articles by a number of eminent scholars from the State. While the focus of the book is on intra-State regional variations in economic growth and human development within Andhra Pradesh, it raises questions and offers insights that have much more general applicability, both within other States of India and in developing countries generally.

The first point relates to the evident disparity across the regions of Andhra Pradesh, in terms of per capita income and growth. While regional disparity in agricultural yield has declined to some extent over the past five decades, it remains significant. South Telengana, Rayalaseema and North Coastal Andhra are the worst off, and this is strongly related to the patterns of rainfall and irrigation in the various regions. These, in turn, help to determine cropping patterns, and suggest why regional concentration in commercial crop cultivation has been increasing.

Manufacturing industry similarly shows substantial variation, although the ranking of the regions changes completely with South Telengana emerging as the most industrially diversified and fastest growing region. Here it is worth noting that in Andhra Pradesh, despite the much-touted market-oriented policies promoted by Chief Minister N. Chandrababu Naidu, industrial performance has been poor to abysmal.

The growth of manufacturing in the 1990s slowed down to around half to the rate of growth of the previous decade. The share of manufacturing in State GDP (Gross Domestic Product) has barely increased, despite the substantial decline in the share of agriculture. Insofar as regional diversity in manufacturing output and employment may have decreased, it is really because all the regions have performed poorly.

The insight in the book lies in the attempt to explain regional diversity, especially in agriculture, dominantly as the reflection of poor or inadequate policies to deal with water sharing across regions and water management in general. Krishna Rao makes the important point that over time "the rulers of the State have not properly planned and developed the available water resources and have not concentrated on the development of backward regions and areas. ..The State has not utilised surplus waters by constructing a chain of reservoirs and tank systems diverting surplus water" to deficit areas like the districts of Rayalaseema.

The neglect of tank irrigation has played an important role in the general decline of water access in what are now the water deficit regions. This has accentuated the differences between the more highly irrigated regions such as South Coastal Andhra, and those regions which earlier relied on surface water systems which have been allowed to fall into disrepair. Furthermore, this pattern also appears to be related to different landholding patterns, both historical and more recent ones. Regions with large landowners holding large tracts show much less development of surface irrigation in general.

THIS emphasis on the role of water management and landholding patterns in generating differences in the extent of rural economic growth will find resonance in many other parts of the developing world. But underlying it is a more basic truth that emerges from the discussion of regional variation in other social and economic variables in this book on Andhra Pradesh.

Some of the more surprising points that emerge from the analysis in the different chapters include the following:

* There has been a decline in the rate of growth of population and in fertility rates, spread across the State, and this decline does not appear to be related to the level of economic development or income growth of the region.

* While the poverty figures for the State are so low as to be dubious, there appears to have been a general decline in the extent of poverty across the State. Once again, this is unrelated to income levels and growth in the regions.

* There are also important changes in human development indicators especially education and health which indicate a shrinking of disparities across the regions of the State. Interestingly, the greatest improvements appear to have been in the regions which have performed more poorly in terms of standard income growth measures.

What does all this really tell us? It seems to point towards a broader conclusion of more general validity. That is, regional divergences in human development indicators in particular can be reduced essentially and dominantly through public intervention. Market processes alone tend to generate more rather than less inequalities across regions, because of the tendency of uneven development of capitalism and the imbalances it creates. This book provides a useful way of understanding this important insight, in the context of one particular State.