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An Empirical Inquiry into Per Capita Convergence of Indian States

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  • Subaran Roy
  • Chitrakalpa Sen
  • Rohini Sanyal

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.

Suggested Citation

  • Subaran Roy & Chitrakalpa Sen & Rohini Sanyal, 2019. "An Empirical Inquiry into Per Capita Convergence of Indian States," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 11(3), pages 232-247, September.
    • Handle: RePEc:sae:emeeco:v:11:y:2019:i:3:p:232-247
    DOI: 10.1177/0974910119887245
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    References listed on IDEAS

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    7. Piketty, Thomas & Chancel, Lucas, 2017. "Indian income inequality, 1922-2014: From British Raj to Billionaire Raj ?," CEPR Discussion Papers 12409, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Vaseem Akram & Jabir Ali, 2021. "Output convergence at sector level across Indian states: Evidence from weak sigma and club convergence analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(7), pages 1166-1188, October.

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