Drishtikon: A Management Journal

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

Economic Reforms and Regional Disparities in India


Affiliations
1 Faculty, Economics and Finance Area at School of Management, Sumandeep Vidiyapeeth University, Vadodara, Gujarat, - 391760, India
2 Faculty, Marketing & General Management School of Management , Sumandeep Vidiyapeeth University,. Vadodara, Gujarat, 391760, India
3 Reader in the Deptt of Commerce including business administration, Maharaja Shayaji Rao University of Baroda, Vadodara
     

   Subscribe/Renew Journal


This paper makes an attempt to re-examine the issue of inter-state inequality of growth and standards of living across 14 major states within the convergence analysis of neoclassical growth paradigm after economic reforms from 1993-94 to 2004-05. Despite inconclusive evidence for β-divergence in per capita real income, the evidence in favour of β-divergence in secondary and tertiary sector in per capita terms shows the rising inter-state inequality of growth and standards of living across the Indian states during this period. This indicates that growth rates of the relatively better off states of these sectors have grown faster than that of the worse off counter parts. Thus, Policy makers and planners can think of creating the investment climates through private-public partnership in different lagging sectors of the states to achieve the balanced inter-state growth and to catch up the standards of living of the better off states.

Keywords

Real Income, Economic Reform, β,-Convergence, Primary, secondary and Tertiary Sectors
Subscription Login to verify subscription
User
Notifications
Font Size


  • Ahluwalia, Montek S. (2001): “Economic performance of the States in the post Reforms Period”, Chapter 28 in Indian Economy Since Independence ed. Uma Kapila, Academic Foundation, New Delhi.

  • Aiyer, Shepherd (2001): “Growth Theory and Convergence across Indian States: A Panel Study”, Chapter 8 in India at the Crossroads: Sustaining Growth and Reducing Poverty,(ed.) Tim Cullen, Patricia Reynolds and Christopher Towe, International Monetary Fund.

  • Akkina, K. N., (1996): “Convergence and the Role of Infrastructure and Power Shortages on Economic Growth across States in India”, Mimeo, Kansas State University.

  • Barro, Robert and Xavier Sala-i-Martin (1995): Economic Growth, New York: McGraw-Hill.

  • Bandyopadhyay, S., (2000a): “Regional Distribution Dynamics of GDP across Indian States, 1965-88”, Development Studies Institute, Working Paper Series No-00-06, London School of Economics.

  • Benhabib. J and M. Spiegel (1994): "Role of Human Capital in Economic Development. Evidence from Aggregate Cross-Country Data”, Journal of Monetary Economics, Vol.34, pp.143-73.

  • Bhattacharya, B.B, and S Sakthivel (2004): “Regional Growth and Disparity in India: Comparison of Pre-and Post-Reform Decades”, Economic and Political Weekly, Vol. 39, No. 10, pp. 1071-1077.

  • Cashin, P and R. Sahay (1996): “Internal Migration, Centre State Grants and Economic Growth in the States in India”, IMF Working Paper, WP/95/66.

  • Dasgupta, D, P. Maiti, R. Mukherjee, S. Searcher, and S. Chakraverti (2000): Growth and Interstate Disparities in India”, Economic and Political Weekly, July 1.

  • Datta Roy Choudhury, Uma (1993): “Inter-State and Intra-State Variations in Economic Development and Standard of Living”, New Delhi: National Institute of Public Finance and Policy.

  • De Long, J. B., (1988): “Productivity Growth, Convergence and Welfare: A Comment”, American Economic Review, Vol. 78, pp. 1138-1155.

  • Dholakia, Bakul H. (2002): “ Sources of India’s Accelerated Growth and the Vision of Indian Economy in 2020”, The Indian Economic Journal April-June, Vol. 49, No. 4, pp.26-46.

  • Dholakia, Ravindra H. (2003): “Regional Disparity in Economic and Human Development in India”, Economic and Political Weekly, vol. 38, No. 39, pp. 4166-4172.

  • Dholakia, R H (1985): Regional Disparities in Economic Growth in India, Bombay: Himalaya publishing House.

  • EPW Research Foundation (2003): National Accounts Statistics, EPWRF (June), Mumbai.

  • Ghosh, B. and P. De (1998): “Role of Infrastructure in Regional Development: A Study of India over the Period”, Economic and Political Weekly, Vol. 33, No. 47 and 48, pp. 3039-3048.

  • Ghosh, B., S. Marjit and C. Neogi (1998): “Economic growth and Regional Divergence in India, 1960 to 1995”, Economic and Political Weekly, Vol. 33, No.26. June 27, pp. 1623-1630.

  • Government of India: (2002-03): Economic Surveys, Ministry of Finance, Economic Division, and Government of India, New Delhi.

  • Gujarati, Damodar N., (2003): Basic Econometrics, Fourth Edition, McGraw Hill: New York.

  • Hanushek, Eric A., and Dennis D. Kimko (2000): "Schooling, Labour Force Quality, and the Growth of Nations', American Economic Review, Vol. 90, No.5, pp.1184-1208.

  • Hoeffler, Anke E. (2002): “The augmented Solow model and the African growth debate”, Oxford Bulletin of Economics and Statistics, Vol. 64, No.2, pp. 135-58.

  • Industrial Development Bank of India: Report on Development Banking in India, Various issues.

  • Kanda, Deniel, Patricia Reynolds, and Christopher Towe (2001): “ Structural Reforms in India”, Chapter 9 in India at the Crossroads Sustaining Growth and Reducing Poverty edited by Tim Callen, Patricia Reynolds, and Christopher Towe, International Monetary Fund.

  • Mankiw, N. Gregory, David Romer, and David N. Weil (1992): “A Contribution to the Empirics of Economic Growth”, Quarterly Journal of Economics, 107(2): 407-437.

  • Marjit. S. and S. Mitra (1996): “Convergence in Regional Growth Rates: Indian Research Agenda”, Economic and Political Weekly, Vol. 31, No-33.

  • Nagaraj, R. A. Varaudakis, and M. A. Veganzore (1997): Long Run Growth Trends and Convergence across Indian States, Technical Paper, and Development Center. No.131.

  • National Accounts Statistics, www.indiastat.com

  • Rao, M.G., R.T. Shand and K.P. Kalirajan (1999): “Convergence of Incomes across Indian States”, Economic and Political Weekly, Vol.34, No.13.

  • Registrar General and Census Commissioner of India (2001, 1991, 1981): Census of India, Population Final Totals, Series 1, New Delhi.

  • Reserve Bank of India (2002-03): Banking Statistics: Basic Statistical Returns, Mumbai (various issues).

  • Ramsey, F.P., (1928): “A Mathematical Theory of Saving”, The Economic Journal, Vol. 38, (December), pp.543-559.

  • Sachs, J.D, N. Bajpai, and A. Ramiah, (2002): “Understanding Regional Economic Growth in India”, Harvard University, CID, working Paper No. 88.

  • Shankar, Raja, and Anwar Shah (2003): “Bridging the Economic divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities”, World Development, Vol. 31, No. 8. pp. 1421-1441.

  • Sala-i-Martin, Xavier (1996): “Regional cohesion: Evidence and Theories of Regional Growth and Convergence”, European Economic Review Vol.40, pp. 1325-1352

  • Xavier-Sala-i-Martin (2002): “ 15 Years of New Growth Economics: What Have We Learnt?” Columbia University and Universitat Pompeu Fabra, Economics Working Paper, 620

  • Shetty, S L (2003): “Growth of SDP and Structural Changes in State Economies: Interstate Comparisons”, Economic and Political Weekly, Vol. 38, No. 49. pp. 5189-5200.

  • Singh, Nirvikar, Laveesh Bhandari, Aoyu Chen and Aarti Khare (2003): Regional Inequality in India: A Fresh Look”, Economic and Political Weekly, Vol. 38, No. 11. March 15-21. pp. 1069-1073.

  • Singh, Nirvikar and T.N. Srinivasan (2002): “Indian Federalism, Economic Reform and Globalisation” as quoted in Singh et al. (2003).

  • Swan, Trevor, W. (1956), “Economic Growth and Capital Accumulation”, Economic Record, 32:334-361.


Abstract Views: 378

PDF Views: 0




  • Economic Reforms and Regional Disparities in India

Abstract Views: 378  |  PDF Views: 0

Authors

Md. Mahtab Alam
Faculty, Economics and Finance Area at School of Management, Sumandeep Vidiyapeeth University, Vadodara, Gujarat, - 391760, India
Ankita Soni
Faculty, Marketing & General Management School of Management , Sumandeep Vidiyapeeth University,. Vadodara, Gujarat, 391760, India
Ur Dangarwala
Reader in the Deptt of Commerce including business administration, Maharaja Shayaji Rao University of Baroda, Vadodara

Abstract


This paper makes an attempt to re-examine the issue of inter-state inequality of growth and standards of living across 14 major states within the convergence analysis of neoclassical growth paradigm after economic reforms from 1993-94 to 2004-05. Despite inconclusive evidence for β-divergence in per capita real income, the evidence in favour of β-divergence in secondary and tertiary sector in per capita terms shows the rising inter-state inequality of growth and standards of living across the Indian states during this period. This indicates that growth rates of the relatively better off states of these sectors have grown faster than that of the worse off counter parts. Thus, Policy makers and planners can think of creating the investment climates through private-public partnership in different lagging sectors of the states to achieve the balanced inter-state growth and to catch up the standards of living of the better off states.

Keywords


Real Income, Economic Reform, β,-Convergence, Primary, secondary and Tertiary Sectors

References