Since its independence, Indian states have experienced different degree and pace of economic growth, where some states are forerunner in terms of economic growth and some others languishing at the back. In India, regional disparity has been one of the major concerns before policy makers and planners. There had been a huge gap between active and vibrant regions and hinterland during pre-independence period in terms of accessibility of amenities and this has resulted in the form of unequal levels of development both in terms of economic and human. After independence, decrease in inter-state disparities has been emphasized during successive Five Year Plans, but the problem continued unabated. For instance, the World Bank (2006) in its reported entitled, “India-Inclusive Growth and Service Delivery: Building of India’s Success” has observed sharp differentiation across states since the early 1990s reflects acceleration of growth in some states but declaration in others. The report further adds that more worryingly, growth failed to pick up in states such as Bihar, Orissa and U.P. that were initially poor to start with, with the result that the gap in performance between India’s rich and poor states widened dramatically during the 1990s. The World Bank (2008) again in its recent release “The Growth Report Strategies for sustained Growth and Inclusive Development” has mentioned that disparity in income distribution in India has risen during 1993-2005 The Draft Eleventh Five Year Plan 2007-2012, vol. I), has also admitted that regional disparities have continued to grow and the gap have been accentuated as the benefits of economic growth have been largely confined to the better developed areas. When wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all. Unless bold political solutions are instituted to curb the influence of wealth on politics, governments will work for the interests of the rich, while economic and political inequalities continue to rise. As US Supreme Court Justice Louis Brandeis famously said, ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’ The present study has been undertaken against this backdrop. In order to accomplished the task, inter-state disparity in total as well as per capita Indian states for the period 1980-2002 has been examined with the help of inequality indices Widening gap in terms of income among rich and poor states, especially after 1991 has this is indeed an alarming situation and a potential threat for stability of a federation like India.
