Regionalism persists as a major challenge to the Indian nation in the form of economic disparity, colonialism had created modern economic infrastructure according to its needs for the market and raw materials.
As a result some regions remained backward, only few around Calcutta, Bombay and Madras had undergone modern industrial development. Attempts were made in the post-independence phase to tackle the disparities to the backward states through planning and disbursement of grants by finance minister.
The roots of these sates backwardness lies in their socio-economic and political organisation itself. Land reforms were not properly implemented in Bihar and eastern U.R In Bihar and Orissa even land consolidation unlike Punjab and Haryana have not taken place effectively. Backward states have a lower level of infrastructural facilities such as power. Irrigation, roads, telephones and modern market for again cultural produce.
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These states also have a lower level of social expenditure on education public health and sanitation. In many cases, the inequality had become a source of tension and given birth to sub-regional movement for separate state within the Indian union i.e. Vidarbha. In Maharashtra or Telengana in Andhra Pradesh consequently some economic development was done and opportunity of employment was developed.
After that sons of soil movement started state belonged to main linguistic group was considered as a son of soil. Other than that was outside. Demands are then raised to give preference to the son of soil in giving employment and economic opportunity. Political and administrative failure also bolsters backwardness.
Sheer bad administration and deteriorating law and order creates a bad atmosphere for development. Thus regionalism has affected the issue of economic development. On all India level economic growth in the 1960-95 and 1970’s was about 3.5% and about 5% in 1980’s.