The foremost role of development banks is to finance economic development in targeted industries, sectors or regions. This role is especially crucial in promoting growth in developing countries, such as India, and in improving prospects for relatively less developed regions of these nations. Both the policy of the central Indian government and the mandates of the nation's development banks call for balanced regional development and assistance to 'backward' areas as means for effecting equitable economic prospects. To assess the level of achievement of these objectives, we investigated the quantum of state-wise assistance provided by six Indian development banks over the 1996-2001 period, focusing on the relative distribution of finance between more and less developed states. Analysis of data revealed statistically significant disparities in development bank financing, on a state-wise basis, to the detriment of less developed regions. We explore a range of possible explanations for this observation in attempting to determine whether the performance of Indian development banks in financing and fostering regional development is misdirected or misunderstood.
|Number of pages||15|
|Publication status||Published - Sep 2007|