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Regional Economic Growth and Inequality in India: A Sector-wise Decomposition Analysis

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  • Ranjan Aneja
  • Barkha
  • Umer Jeelanie Banday

Abstract

This article attempts to examine the behaviour of various sectors, with emphasis on the role of income inequality. First, the article estimates the sectoral decomposition in terms of net state domestic product (NSDP) among different states from years 1991–1992 to 2016–2017. Second, we analyse the sector-wise decomposition of regional inequality in term of per capita income. Finally, we analyse the role of developmental expenditure in regional inequalities in term of per capita developmental expenditure across various states. Based on empirical results, India has witnessed a high growth in per capita income in the post-reform period. With high growth rate, the sectoral composition of income has also registered a major change. The tertiary sector is the major contributor to growth in the post-reform period. At the sectoral level, disparity decreased within the sectors in case of primary and tertiary sector and increased in secondary sector. However, overall, the tertiary and secondary sectors are more responsible for raising the income inequality among the states while primary sector is offsetting this gap. JEL: O15, I14, I32, O12

Suggested Citation

  • Ranjan Aneja & Barkha & Umer Jeelanie Banday, 2021. "Regional Economic Growth and Inequality in India: A Sector-wise Decomposition Analysis," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(1), pages 95-110, June.
    • Handle: RePEc:sae:artjou:v:20:y:2021:i:1:p:95-110
    DOI: 10.1177/0976747920910825
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    References listed on IDEAS

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    1. Mehak Majeed & Saeed Owais Mushtaq & Zahid Gulzar Rather, 2022. "The Complementarity Between the Formal and Informal Sub-sectors of the Indian Industry," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(4), pages 981-1006, December.

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    More about this item

    Keywords

    Economic growth; income inequality; net state domestic product; economic reform;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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