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Transfer Dependence of Northeast States: Are the Growth Effects of Grants Uniform Across States?

Author

Listed:
  • Avijit Debnath
  • Niranjan Roy
  • Nairita Bhattacharjee

Abstract

After decades of intergovernmental transfers in India, studies to analyse the impacts of central government transfers on regional growth are inadequate. Even the limited studies that have been done have excluded the northeastern region (NER) from their analysis, except for the state of Assam. This article examines the impact of central government grants on economic growth in northeast India. In addition, we analyse if the growth impact of grants, if any, is uniform across states. Our analysis, based on official secondary data from eight northeastern states for the period 1991 to 2010, shows that per capita real central grant is positively associated with economic growth, but conditional on other variables being held constant. However, the effects of such grants are not uniform across the states. The growth effect of grants is estimated to be highest in Assam and lowest in Mizoram.

Suggested Citation

  • Avijit Debnath & Niranjan Roy & Nairita Bhattacharjee, 2013. "Transfer Dependence of Northeast States: Are the Growth Effects of Grants Uniform Across States?," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 7(1), pages 117-130, February.
    • Handle: RePEc:sae:mareco:v:7:y:2013:i:1:p:117-130
    DOI: 10.1177/0973801012466168
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    References listed on IDEAS

    as
    1. R. Nagaraj & A. Varoudakis & M.-A. Véganzonès, 2000. "Long-run growth trends and convergence across Indian States," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 45-70.
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    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
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    More about this item

    Keywords

    Central Grant; Regional Development; Panel Data; Fixed Effects; Northeast India; H77; R58; C33; 047;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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