This paper makes an attempt to analyse the behaviour of regional income inequalities and capital inequalities in India. It also seeks to examine the relationship between the trend in regional income inequality and regional allocation of investment among different states. Part I of the paper presents the estimates of the extent of income and capital inequalities among different states for the years 1960-61 and 1970-71. Part II analyses the interstate variations in capital-output ratio. The final part of the paper examines some alternative approaches to balanced regional development.