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What explains Regional Imbalances in Infrastructure?: Evidence from Indian States

Author

Listed:
  • Mohanty, Biswajit

    () (A.B. College, Bhadrak, Odisha)

  • Bhanumurthy, N. R.

    () (National Institute of Public Finance and Policy)

  • Dastidar, Ananya Ghosh

    () (University of Delhi)

Abstract

The literature on regional growth suggests that divergences in infrastructure is a major factor behind the wide and persistent regional growth imbalances in India. Using a state infrastructure-expenditure function, the paper examines the possible factors that determine infrastructure expenditure and its implication for regional imbalance in infrastructure creation across 14 major Indian states. We, in the present study, find that factors such as resource mobilization, per capita income, and population density may result in unequal infrastructure expenditure across states. We also find that factors such as more spending by the infrastructure-deficit states, political stability, and positive spatial dependence in infrastructure expenditure among states have a balancing effect on infrastructure creation across regions. These results suggest the need for augmenting the financial capacity of the infrastructure-deficit states and strengthening the positive spatial dependence among states through creation of interstate infrastructure networks (railways, national highways etc.) and conducive investment climate, which could boost competition among states for better infrastructure creation.

Suggested Citation

  • Mohanty, Biswajit & Bhanumurthy, N. R. & Dastidar, Ananya Ghosh, 2017. "What explains Regional Imbalances in Infrastructure?: Evidence from Indian States," Working Papers 17/197, National Institute of Public Finance and Policy.
  • Handle: RePEc:npf:wpaper:17/197
    Note: Working Paper 197, 2017
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    References listed on IDEAS

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    Cited by:

    1. Tandon, Suranjali & Rao, R. Kavita, 2017. "Trade Misinvoicing: What can we Measure?," Working Papers 17/200, National Institute of Public Finance and Policy.

    More about this item

    Keywords

    infrastructure ; regional imbalance ; spatial dependence ; Indian states;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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