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Rich States, Poor States: Convergence and Polarisation in India

  • Sanghamitra Bandyopadhyay

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: 01 Jun 2006
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Handle: RePEc:oxf:wpaper:266
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