This paper examines the characteristics and problems of economic development in an underdeveloped state, focusing on industrial development. The study area, Uttarakhand State, is located in the Himalayan mountain region and was created in 2000, separating itself from Uttar Pradesh State. The state has experienced underdevelopment and formed a "Money Order Economy" that depends on the money sent from migrant workers. Therefore, the local people strongly desire regional development based on industrialization and greater employment opportunities. For achieving such industrial development, the UP state government developed the Bhimtal Industrial Estate in the 1980s. We selected the estate as a main study area, in which an intensive survey for factories and other institutions was conducted in 2009.
The Bhimtal Industrial Estate in the 1980s attracted special attention as a successful case of regional development in mountainous regions because the UP state government succeeded in attracting electronics industries, which set up factories for television sets and related products. As a result, the industrial cluster created increased job opportunities for the local people. However, in the 1990s, most of the factories located in the estate were closed due to the intensified competition that started in India under economic liberalization.
Our survey in 2009 revealed that the characteristics of the Bhimtal Industrial Estate dramatically changed. Factories in operation consist of small scale businesses in a variety of industries. They have few mutual business transactions in the estate. Thus, the industrial estate has not been successful in making an integrated industrial cluster, though we should pay attention to some factories and flower farms that highly evaluated the location factor of the natural environment and local resources in mountainous regions. The estate is in the process of change from an industrial area to an urban complex. Some administrative bodies shifted from Nainital to Bhimtal to get sufficient space, and educational institutions were also established in that area.
This case highlights an example of industrial development in India's underdeveloped region. In the planned economy period, the state government implemented a strong policy measure for industrializing backward areas. However, under the liberalized economy, the state had great difficulty in attracting industries to such areas. In Uttarakhand State, large scale industrialization is now going on in the plain region. This means increasing regional disparities between citizens living in the plains and the mountains in the same state. We need to chart the future economic development scenario of mountainous regions with a broad perspective, including sustainability.