Place-based Policies’ Effect on Regional Disparities

Regional inequality has been a challenge for low- and middle-income governments due to growing geographical and regional inequalities in economic activity, income, employment, and social indices. These governments have struggled with it for a while. Place-based programmes like India’s Backward Regions Grant Fund (BRGF) have been introduced to tackle this problem. These strategies target specific areas to reduce inequalities. Annmary Jose’s paper titled “Do Policies Targeting Poor Districts Work? An Evaluation of the Backward Regions Grant Fund Programme” (EPW, 26 August 2023) investigates the efficacy of such programmes by making use of data from the census of both 2001 and 2011, in addition to a nationally representative panel survey of rural households in India.

The paper begins by recognising the growing regional disparities in many nations and the rationale behind place-based policies. The purpose of these policies is to address market defects with spatial dimensions such as knowledge spillovers, agglomeration economies, and equity motivations. They are founded on the belief that targeting specific regions can help in surmounting market imperfections and stimulating economic growth by attracting firms, generating positive externalities, and promoting industry localisation.