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Rich States, Poor States: Convergence and Polarisation in India

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Sanghamitra Bandyopadhyay

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Abstract

The distribution dynamics of incomes across Indian states are examined using the entire income distribution rather than using standard regression approaches. The period 1965 to 1997 exhibits twin-peaked dynamics: there are two income convergence clubs at 50% and 125% of the national average income. Disparities across the states declined over the sixties and then increased. The observed polarisation is explained by the disparate distribution of infrastructure, in particular, that of education, irrigation and literacy in the formation of the lower convergence club. Parametric analysis establishes irrigation, education, roads, industrial power consumption and bank deposits as infrastructure components explaining cross-state variation in growth.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 266.

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Date of creation: 2006
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Handle: RePEc:oxf:wpaper:266

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Keywords: Convergence Clubs Distribution Dynamics Education Infrastructure Panel Data India

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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