Dynamics of Growth Regional Perspective: Experience of Five Indian Industrial Towns 1961-1991

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Dr. Nandita Basak has long been engaged in teaching in the Economics Department of Bethune College, Calcutta, a reputed college in West Bengal. Presently she holds the position of Head of the Department of Economics. She is the Honorary Associate and guest lecturer in the Centre for Urban Economic Studies (Calcutta University), a U.G.C. sponsored premier research institute in the field of Urban and Regional Studies. Apart from regional and urban economics, Dr. Basak has interest in public finance and the political economy of capitalism and contributed papers in above areas of study in journals, seminar publications and books. She has also held important academic- cum-administrative assignment as Member, West Bengal College Service Commission.

The study was undertaken when the author was attached to the Centre for Urban Economic Studies, University of Calcutta. It was the doctoral dissertation done under the Fellowship Programme of the University Grants Commission. The aim is to study the growth pattern of five Indian Industrial towns and to analyse the role of such towns in regional growth.

A number of industrial towns emerged during the past several decades as a part of the national industrialisation programme in India. Being new towns they opened up possibilities of diverse economic activities, attracted large number of migrants and became responsible for stepping up the speed of urbanisation process in the respective regions. The present study selects five steel towns of India for an in- depth study of which four are relatively new, viz. Bhilai, Rourkela, Durgapur, Bokaro and one is relatively old, viz. Jamshedpur. The study enquires, in the first place, whether any definite pattern can be established as regards the economic, demographic and occupational character and related changes in those towns during their growth process.

Secondly, the study attempts to find the nature of interaction between the towns and the respective regions. The process of transmission of urban impact has been studied mainly with respect to trade flows, absorption of labour, household sector expenditure. Thirdly, the study tries to point out the limitations in the form of various leakages as observed during the process of growth transmission.

In the context of regional growth experience in the less developed areas the neo-classical location theory proved to be inadequate particularly due to restrictive assumptions. Given highly idealised situation they advocated self-equilibrating mechanism in the context of regional growth and inequality. But at the same time the fact remains that the operation of the market forces accentuates inequality between regions.

From the early days of what has come to be known as Urban Economics, policy issues relating to location of industries had been one of its major components. This issue was of crucial significance to countries where the government led the industrialisation programme, often setting up industries under public ownership, subsidising those and protecting those from foreign predators by way of import control and high tariff. In these cases, early in their post- colonial life, the governments had to go beyond the balance sheet and the calculus of costs and benefits specific to the industrial project itself and had to take into account their implications for the economy and society as a whole. The viability of an industrial project was to be judged also in terms of its ability to lift the overall level of economic activity in its hinterland, may not be in the short run, but certainly in the long run.

In India's case the Industrial (Development and Regulation) Act of 1951 had as one of its objectives location of key industries in backward areas, hoping that such location decision would boost the frail local economy by way of both forward and backward linkages. These industries-whether a steel plant or a power station or a machine tool factory, or something else-were expected to play the role of 'growth poles', where a good number of inter-related industries would be located, and this, in turn, would inspire technological and managerial up gradation of them all, as they will learn from, and create demand for the products of, one another. Many of these ideas were derived from theoretical models of Perroux, Myrdal, and others. Though Perroux's model of growth pole was not essentially bound by space, in the hands of the planners a strong spatial dimension was added, while Myrdal's ideas on 'spread' and 'backwash' effects showed how in the early phase the latter was likely to be the dominating influence, though in the long run the former was expected to prevail.

Post-war writings in regional problems have widely posed the question, whether the functioning of the competitive forces of the market economy tends to reduce regional inequality. While the neoclassical theorists were the exponents of the self-adjusting, equilibrating process, Hirschman', Myrdal and Perroux', among others, held the opposite concept of cumulative imbalance and growth with disequilibrium. They refuted the neoclassical self-equilibrating theory on the ground that it assumed a highly idealised situation of perfectly competitive market, while the fact remains that, regional inequality is inherent in the market system and, more important, the operation of market forces actually accentuates inequality between the regions. This inequality is glaringly manifested in the excessive growth of the metropolitan and other large cities, at the cost of the small and medium towns, resulting in an acute regional imbalance. These, in turn, lead to a serious deterioration in quality of life and shortage of urban amenities leading to the decline in the productivity of the Economic sectors.

The conclusions that emerged from this analysis established the need to undertake deliberate intervention in order to correct the imbalance by encouraging the growth of new urban centres of small and medium size. It was thought that the centres having growth potential might be selected in the less developed regions which would generate self-sustained growth and promote economic development in the surrounding regions.