Examining the Convergence in the Economic Growth of Indian States

After crossing the Hindu growth rate in the 1990s, the Indian economy has been experiencing a consistent and increasing growth of national Gross Domestic Product (GDP) both at current and constant prices. This growth in the national level GDP is resulting in a high growth rate of the State Domestic Product (SDP) of various states. However, it will also be interesting to find out whether there is a convergence in the economic growth of the Indian states or not. National level data indicates that the growth rate of the country is over 8% in the Eighth, Ninth and Tenth Five Years Plans, except some bad years and it is expected that the annual growth rate will go even further in the Eleventh Plan. But whether this growth is for all or it is just for some states—is the objective of the present study. This has been done by taking the SDP of 18 Indian states into consideration. The paper calculates the growth rate of all the 18 states for the period of 1980-81 to 2004-05. The entire period has been divided into two parts: 1980-81 to 1990-91 and 1991-92 to 2004-05. The period 1980-81 to 1990-91 can be referred to as the pre-Globalization, Liberalization, and Privatization (GLP), whereas the period 1991-92 to 2004-05 can be referred to as the post-GLP period. This bifurcation has been done for finding out the differences in the convergence of growth rate between pre- and post-GLP. In the pre-GLP period the national level as well as the state level growth rate in per capita GDP was less than that in the post-GLP period. So it will be interesting to see whether the increase in the annual growth rate of the country has led to the convergence or divergence in the growth rate of SDP.