Acknowledgements
Earlier versions of the paper have been presented at the National
Seminar on 'National Environment Policy 2006: Objectives, Strategies
and Implementation', organized by Department of Economics, Jamia
Milia Islamia (on 21 February 2007) and at the National Conference on
'Making Growth Inclusive with Special Reference to Imbalance in
Regional DeveIopmentrJointIy organized by Department OfEconomics,
Jammu University and Indian Institute of Advanced Studies, Shimla
(on 12 March 2007). We thank all the participants in these two
conferences for their helpful comments. We are especially grateful to
Prof. Paul P. Appasamy Prof. U. Shankar, Dr. Vinish Kathuria and Dr. Ajit
Menon for their detailed suggestions on an earlier draft of our paper.
We however are fully responsible for all errors remaining.
1. Introduction
The economic reform process initiated in 1991 has played a
major role in shaping India's overall as well as its sub-regional economic
growth so far. First, the unshackling of domestic industries, coupled
with the shift towards export-oriented economic philosophy caused an
industrialisation drive across the Indian States. Second, the easing of
FDI approval system provided ample opportunities for States with
enterprising governments to strike their own growth curves by
encouraging investment and thereby ensuring industrialisation within
their territories. Third, in the post-1991 period the policy objective of
achieving balanced growth no longer remained a driving concern, and
thus the possibility of increasing industrial concentration in strategic
locations. Fourth, the States characterised by better infrastructural
conditions grew at a much higher rate as compared to the natural-
resource rich economies (Bhandari and Khare, 2002).
The enhanced growth is likely to raise the general level of
human development (HD) in the current period, which in turn may
influence future economic growth (EG) potential positively. However,
increasing industrialization or urbanization on the other hand, if not
associated with requisite level Ofgovernance, can considerably influence
the environmental sustainability of the State in question (Gulati and
Sharma, undated; Indian NGOs, undated). The adverse impact could
either come through natural resource depletion and/or adverse health
consequences Ofenvironmental degradation, e.g., air or water pollution
(Brandon and Hommann, 1995).