An Empirical Inquiry into Per Capita Convergence of Indian States. (September 2019)

• Record Type: Journal Article
• Authors: Roy, Subaran; Sen, Chitrakalpa; Sanyal, Rohini
• Is Part Of: Global journal of emerging market economies. Volume 11:Number 3(2019)
• Page Start: 232
• Page End: 247
• Publication Date: 2019-09
• Subjects: Economic growth -- per capita state domestic product -- growth convergence -- inequality; Investments, Foreign -- Periodicals; Economic development -- Periodicals; Developing countries -- Economic conditions -- Periodicals; Developing countries -- Social conditions -- Periodicals; Developing countries -- Politics and government -- Periodicals; 330.9172405
• DOI: 10.1177/0974910119887245
• Languages: English
• ISSNs: 0974-9101

Abstract

The topic of growth convergence (or the lack of it) has always been one of the most important economic phenomena for Indian states. This study undertakes more than 3 decades of data for Indian states from the 1980s and traces convergence of state-level per capita income; breaking the data down into the subperiods based on time and levels of income using panel unit root tests. The results show no discernible evidence of convergence across the states, especially after post-liberalization. However, taking into account control variables for capital expenditure, development expenditure, and fiscal deficit, we find significant evidence for convergence of state-level per capita GDP. This indicates that the nature of inequality across states is not structural in nature and can be reduced through active policy interventions.