Regional inequality a bigger issue than wealth inequality: Montek Singh Ahluwalia

Bengaluru: Former Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said on Wednesday that regional inequality in India was a bigger challenge than income inequality, and that Indian politics will have to come to terms with the reality of the southern states growing faster than the northern states.

Speaking at a session titled, ‘Resilient Pathways: Charting India’s Economic Growth Amid Global Challenges’, at the Global Investors’ Meet, Ahluwalia said, “There is growing regional inequality, even though wealth distribution is taking place… Even if the country were to grow at 8 per cent on a consistent basis, your challenge will be that are you ready for it? The South may grow at 9% while the North may grow at 8%; can our politics deal with that reality?” 

Ahluwalia, who has been a former Secretary in the Union Finance Ministry and was key part of the late Manmohan Singh’s 1991 reforms ‘team’, said that there has to be a structural transformation in the economy for it to achieve 8 per cent plus growth, and that could mean some sectors or businesses being phased out.

He said that while Karnataka had done well as a state, and called Bengaluru ‘a global leader’ in the tech sector, no government in any state was consciously thinking about setting up new urban centres. He even went on to suggest that perhaps the only way to develop more cities was to break up states in order to have new capitals.

“These are my views, not specific to Karnataka. The best development is being seen in cities which are capitals of newly carved out states,” he said.

One of the architects of liberalisation, Ahluwalia said that the 1991 reforms were easier compared to any similar exercise being tried today because the global order is more fragmented now than it was in the early 90s.

In the backdrop of United States President Donald Trump raising tariffs, Ahluwalia said he supported the Union Budget 2025’s move of cutting tariffs and basic customs duties.

“I have been of the view that we needed to cut our tariff rates, and I welcome the announcements in the budget. I have believed that India’s tariff rates have been high, and in fact, we should go for further cuts,” Ahluwalia said.