Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Convergence of Indian States in the First Decade of the 21st Century


Affiliations
1 St. Xavier’s College (Autonomous), Kolkata, 30 Mother Teresa Sarani. Kolkata 700016, West Bengal, India
2 Department of Economics, University of Calcutta, 56 A, B.T. Road, Kolkata 700050, West Bengal, India
     

   Subscribe/Renew Journal


The paper examines inequality across the Indian states from 2000-2001 to 2009-2010. To address the factors causing the interstate differences we have focused on the coefficient of variation of private and public investment across the Indian states over the time period 2001-2010. In both of the cases we have observed an increasing trend. In this context we have identified the determinants of private as well as public investment. Here we observe conditional divergence across the Indian states but fixed effect panel data model exhibit conditional convergence. The factors such as grants received by the states as recommended by the Finance Commission, and political stability of the states in terms of irregular government change from one ruling political party to another and infrastructure are the statistically significant determinants of private investment. However, in the case of public investment, infrastructure of a state is not a statistically significant determinant. Therefore, to address the issue of inequality across states, the policy should focus on these determinants of private and public investment across them.
Subscription Login to verify subscription
User
Notifications
Font Size

  • Barro, R.J. (1991), Economic Growth in a Cross Section of Countries, The Quarterly Journal of Economics, 106(2): 407-443.

  • Barro, R.J. and Xavier Sala-I-Martin (1992), Convergence, Journal of Political Economy, 100(2): 223-251.

  • ---------- (1995), Economic Growth, McGraw Hill, New York.

  • Ben David, D. (1993), Equalizing Exchange: Trade Liberalization and Income Convergence, Quarterly Journal of Economics, 108(3): 653-679.

  • Bloom, David E. and Jeffrey G. Williamson (1998), Demographic Transitions and Economic Miracles in Emerging Asia, World Bank Economic Review, 12(3): 419-455.

  • Casin, P. and R. Sahay (1996), Internal Migration, Center-State Grants, and Economic Growth in the States of India, Staff Papers - International Monetary Fund, 43(1): 123-171.

  • Coale, Ansley J. and Edgar M. Hoover (1958), Population Growth and Economic Development in Low Income Countries: A Case Study of India’s Prospects, Princeton: Princeton University Press.

  • Dasgupta, D., P. Maity, R. Mukherjee, S. Sarkar and S. Chakraborty (2000), Growth and Interstate Disparities in India, Economic and Political Weekly, 35(27): 2413-2422.

  • Dowrick, S.A. and Nguyen (1989), OECD Comparative Economic Growth 1950-1985: Catch-up and Convergence, American Economic Review, 79(5): 1010-1030.

  • Ghosh, B., S. Marjit and C. Neogi (1998), Economic Growth and Regional Divergence in India, 1960 to 1995, Economic and Political Weekly, 33(26): 1623-1630.

  • Higgins, Matthew and Jeffrey Williamson (1997), Age Structure Dynamics in Asia and Dependence on Foreign Capital, Population and Development Review, 23(2): 261-293.

  • Jian, T., Jeffrey D. Sachs and Andrew M. Warner (1996), Trends in Regional Inequality in China, Economic Review, 7(1): 1-21.

  • Kumar, U. and A. Subramanian (2012), Growth in India’s States in the First Decade, Economic and Political Weekly, XLVII(3): 48-57.

  • Lucas, R.E. (1988), On the Mechanics of Development Planning, Journal of Monetary Economics, XXII: 3-42.

  • Nagaraj, R., A. Varoudakis and M. Véganzonès (1998), Long-run Growth Trends and Convergence across Indian States, OECD Development Centre, 131.

  • Nayyar, G. (2008), Economic Growth and Regional Inequality in India, Economic and Political Weekly, 43(6): 58-67.

  • Raju, S. (2012), Growth across States in the 2000s: Evidence of Convergence, Economic and Political Weekly, June 9, XLVII(23): 76-79.

  • Rao, M.G., R.T. Shand and K.P. Kalirajan (1999), Convergence of Incomes across Indian States: A Divergent View, Economic and Political Weekly, 34(13): 769-778.

  • Rodrik, D. and A. Subramanian (2004), From Hindu Growth to Productivity Surge: The Mystery of the Indian Growth Transition, IMF Working Paper, May, WP/04/77.

  • Romer, P. (1986), Increasing Returns and Long Run Growth, Journal of Political Economy, 94(5): 1002-1037, October.

  • Sachs, D.J. and A. Warner (1995), Economic Reform and the Process of Global Integration, Brooklings Paper on Economic Activity, 1.

  • Sachs, D.J. and N. Bajpai (1996), Trends in Inter-state Inequalities of Income in India, Development Discussion Paper, Harvard Institute for International Development, Harvard University, 528, May.

  • Sachs, D.J., N. Bajpai and A. Ramiah (2002), Understanding Regional Economic Growth in India, Working Paper, Centre for Development at Harvard University, 88.

  • Singh, N. and T.N. Srinivasan (2002), Indian Federalism, Economic Reform and Globalisation, Paper prepared for CREDPR project on Globalisation and Comparative Federalism.

  • Solow, R.M. (1956), A Contribution to the Theory of Economic Growth, The Quarterly Journal of Economics, 70(1): 65-94.

  • Trivedi, K. (2002), Regional Convergence and Catch-up in India between 1960-1992, Working Paper, December, Nuffield College, University of Oxford.


Abstract Views: 452

PDF Views: 0




  • Convergence of Indian States in the First Decade of the 21st Century

Abstract Views: 452  |  PDF Views: 0

Authors

Soumi Bhattacharya
St. Xavier’s College (Autonomous), Kolkata, 30 Mother Teresa Sarani. Kolkata 700016, West Bengal, India
Kumarjit Mandal
Department of Economics, University of Calcutta, 56 A, B.T. Road, Kolkata 700050, West Bengal, India

Abstract


The paper examines inequality across the Indian states from 2000-2001 to 2009-2010. To address the factors causing the interstate differences we have focused on the coefficient of variation of private and public investment across the Indian states over the time period 2001-2010. In both of the cases we have observed an increasing trend. In this context we have identified the determinants of private as well as public investment. Here we observe conditional divergence across the Indian states but fixed effect panel data model exhibit conditional convergence. The factors such as grants received by the states as recommended by the Finance Commission, and political stability of the states in terms of irregular government change from one ruling political party to another and infrastructure are the statistically significant determinants of private investment. However, in the case of public investment, infrastructure of a state is not a statistically significant determinant. Therefore, to address the issue of inequality across states, the policy should focus on these determinants of private and public investment across them.

References





DOI: https://doi.org/10.21648/arthavij%2F2019%2Fv61%2Fi2%2F183612