India: Development Disparities and Geoeconomic Capacity

DOI: 10.20542/0131-2227-2018-62-5-97-109

A. Volodin (,
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow 117997, Russian Federation 

Acknowledgements. The article has been supported by a grant of the Russian Science Foundation. Project no. 14-28-00097 “Optimization of Russian Outward Investment Ties amid Deteriorating Relations with the EU”.

Abstract. With India taken as a case-study, the author gives special attention to the “polarized” type of development (disintegration of national economy), which affects the economic potential of the state. India, like many other transitional societies, is still at the middle stages of market-governed development and is still to resolve the controversy between economic growth and social equity. In such cases, “free market” is not in a position to find the optimal balance between initiative and intervention. According to the present writer, economic parameters per se cannot be treated as a yardstick for trajectory of development. Disparities in interregional development tend to be more articulated under rapid economic growth. The global recession of the 2010s has made a task of instituting a balanced socio-economic development even harder to attain. Across the terrain of subcontinental landmass, two basic types of socio-economic development are singled out: number one – stationary (the most populous states of India), and number two – isolated (the Northeastern states) due to geographic “separation” from the “mainland” India. The states like Uttar Pradesh and Bihar accounting for a quarter of India’s population, suffer from poor infrastructure for development and need a “blitzkrieg” of investment in power, roads and agriculture to generate economic growth. Lack of investments will make it more difficult to achieve and sustain a high rate of growth in the years to come. The political context of development in the “superlarge” states is aggravated by erosion of the Hindu United Family, on the one hand, and by synchronous pressures of rising social aspirations and stagnant or slow-growing incomes, on the other. Northeast India, a diverse region comprising eight states, is connected with “mainland” India by a passage less than 29 kms wide. The region lost connectivity and market access as a result of the Partition in 1947. The connectivity loss is instrumental for sluggish development of India’s North East that has now fallen behind other states and territories of the country. Given the geographical proximity of the area to South East Asia, economic cooperation may accelerate growth in India’s North East. Nonetheless, blending of domestic policy with foreign policy has not yet attained desired economic results. India is undergoing not only an economic but also a political change. The future of the country is ultimately dependent on harmonizing interests of winners and losers of development. In terms of political economy, both types of development are to be encouraged by targeted investments to overcome “stationary equilibrium”. According to the author, India’s (existent) investment potential is not adequate to stimulate economic growth. One of the “hidden” resources for rapid growth and advanced geoeconomic potential is tentative investment cooperation with foreign countries, including Russia. 

Keywords: India, disparities of development, disintegration of economy, “dualistic” economic growth, caste system, economic geography, “stationary” type of development, “isolated” type of development, SAARC, South Asia 


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For citation:
Volodin A. India: Development Disparities and Geoeconomic Capacity. World Eonomy and International Relations, 2018, vol. 62, no. 5, pp. 97-109.

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