Co-financed central schemes promote competitive federalism but may widen regional disparities. Critically analyse with reference to recent industrial park schemes.

Co-financed schemes ask states to put in their own money and land to win central funds. The BHAVYA Rasayan Scheme (₹3,030 crore, three chemical parks, FY27–FY31) is an example: states compete in a challenge-based selection, and the Centre gives up to ₹1,000 crore per park only if the state puts in at least ₹500 crore [1]. This model creates healthy rivalry among states, but it can also concentrate investment in states that are already rich.

How co-financing promotes competitive federalism

• States have money at stake: each state's ₹500 crore and 2,000 acres of land give it a reason to fill the park, not just get it approved [1].
• Selection on merit: a Steering Committee assesses proposals and rewards states with better governance, land readiness and connectivity [1].
• States compete for investors: seven Partner States, including Bihar and Uttar Pradesh, sought investors at India Chem 2026 [3].
• Lessons from spreading funds too thin: concentrating money in 3 large parks avoids the problem seen with the 10 Plastic Parks, where only 322 of 919 plots had been allotted [2].

How it may widen regional disparities

• High entry cost: 2,000 acres of contiguous, encumbrance-free land plus ₹500 crore favours states with strong finances and land banks [1].
• Past schemes favoured already-industrial states: among PCPIRs, Gujarat leads in investment and jobs while Andhra Pradesh and Odisha lag; Andhra Pradesh still lacks an anchor tenant [2].
• Remote locations struggle: Plastic Parks in Jharkhand, Tamil Nadu and Karnataka recorded no plot allotments at all [2].
• Feedstock gaps hurt laggard states: even where anchor tenants existed, they often used feedstock in their own plants instead of supplying smaller units nearby [4].
• Limited reach: seven Partner States are competing for only three parks [1][3].

Assessment

Competitive selection rewards states that are already capable and does little for those that need help. The design improves how efficiently funds are used, but it does not by itself make development more even across regions.

Co-financing builds state ownership, but the parks need safeguards to prevent regional imbalance. These could include differentiated matching shares for less-developed states, mandatory anchor tenants, and grant instalments linked to plot occupancy. Combining these with the Standing Committee's call for a review of the 2007 petrochemicals policy [2] would balance competitive federalism with the constitutional aim of balanced regional development (Article 38(2)).