One of the serious problems faced by India's economy is the alarming growth rate of regional differences among India's different states and territories in terms of per capita income, socio-economic development, poverty and availability of infrastructure.
Economic disparity is easily visible in the country by the fact that 40-50% of the populations in Bihar and Orissa live below the poverty line while states such as Delhi and Punjab exhibit very low poverty ratios.
There are in total 7 states of India which are lagging behind in the race of economic growth namely Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh.
Annual growth rates of different states between 1999 and 2008 strongly reveals economic disparities in the country as per the data Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much ahead in the race as compared to Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).
Economic disparity in India can be compared by the fact that growth rates of the states of the single country varies to the greater extent. Rural Orissa (43%) and rural Bihar (40%) stands in the list of states with the poorest growth rates in the world while rural areas of other states of the same country India, lies well among the middle-income countries as rural Haryana (5.7%) and rural Punjab (2.4%).
Though the Indian Govt. is constantly trying to improve the economic status of different states by implying different policies and programs yet the issue is of major concern. The five-year plans introduced by the Indian Govt. have proved to be useful in reducing regional disparities.
5 years plan emphasized on encouraging industrial development in the interior regions, but industries still tend to concentrate around urban areas and port cities while on other hand, union and state governments of backward regions are putting their efforts to bring the country under the state of economic equality rather than economic disparity.
Government is trying to reduce the disparities by offering tax holidays, cheap land, among others, and concentrating on sectors like tourism, which can boost the state’s economy.