Financial inclusion through Kisan Credit Cards in Disadvantaged Region like Arunchal Pradesh - Is There District-Level Convergence?

Arunachal Pradesh, though strategically very important, is one of the most backward States in the country in the traditional sense of economic parameters. The long isolation and separation from the main stream of the country, posed formidable problems to the efforts of socio-economic development of the State. This paper examines the question of convergence in Arunachal Pradesh agriculture since the last decade. It focuses on the questions of (a) whether there has been a catching-up tendency (β-convergence) of slow-growing districts with fast-growing ones; and (b) whether there has been a tendency towards convergence (σ-convergence) in agricultural productivity in the last one decade (2000-2010) over a representative cross-section of Arunachal Pradesh districts. The paper also tests the operation of Galton’s fallacy through growth-terminal level regressions for robustness of the results. The tendency of low-KCC concentration districts to catch up with high-KCC concentration districts is studied through the unconditional β-convergence approach, and the operation of Galton’s fallacy through growth-terminal agricultural productivity-level regressions. The diminution of variance in productivity levels is tested using the σ-convergence approach and the robustness of the results is tested using alternative test statistics.