The Impact of Economic Liberalization on India’s Regional Disparities

Abstract

The greater exposure to the market-oriented economy, heralded by the economic liberalization in India in 1991, saw an accelerated growth. But such growth has been distributed unevenly across different states of India, leading to an imbalance between the performances of states. This paper discusses liberalization and its impact on regional inequalities in economic growth within India. The growth of overall economic development following liberalization was faster, and states like Maharashtra, Gujarat, and Tamil Nadu, which are endowed with better infrastructure and human capital, have benefited disproportionately. On the other hand, relatively backward states like Bihar, Uttar Pradesh, and Odisha have lacked adequate investment and growth impetus. The paper looks at various reasons for such divergence: governance, infrastructure, human capital, and the implementation of policies. It also covers the role that interventions by the central and state governments can play in terms of balancing regional development. The paper concludes with proposed policy measures intended to reduce disparities and provide for inclusive growth in terms of improved infrastructure, education, and attracting investments in backward areas. Knowledge of such dynamics essentially stands before the policymakers who have to handle regional imbalances so that wholesome economic growth can take place in India.

DOI - https://doi.org/10.65525/SVUP.9788199651586.2026.140-158