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Rich States, Poor States: Convergence and Polarisation in India

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  • Sanghamitra Bandyopadhyay

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.

Suggested Citation

  • Sanghamitra Bandyopadhyay, 2006. "Rich States, Poor States: Convergence and Polarisation in India," Economics Series Working Papers 266, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:266
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    Cited by:

    1. Ghosh, Madhusudan & Ghoshray, Atanu & Malki, Issam, 2013. "Regional divergence and club convergence in India," Economic Modelling, Elsevier, vol. 30(C), pages 733-742.
    2. Sanghamitra Bandyopadhyay, 2016. "The persistence of inequality across Indian states," Working Papers 74, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    3. Alessandrini, Michele & Buccellato, Tullio & Scaramozzino, Pasquale, 2008. "Whither the Indian Federation? Regional Disparities and Economic Reforms," MPRA Paper 23416, University Library of Munich, Germany.
    4. Oleg Badunenko & Kiril Tochkov, 2010. "Soaring dragons, roaring tigers, growling bears," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 539-570, July.
    5. repec:spr:jqecon:v:15:y:2017:i:2:d:10.1007_s40953-016-0051-6 is not listed on IDEAS
    6. Mario Holzner, 2012. "The Determinants of Income Polarization on the Household and Country Level across the EU," wiiw Working Papers 93, The Vienna Institute for International Economic Studies, wiiw.
    7. Narayan, Seema & Rath, Badri Narayan & Narayan, Paresh Kumar, 2012. "Evidence of Wagner's law from Indian states," Economic Modelling, Elsevier, vol. 29(5), pages 1548-1557.
    8. Ankita Mishra & Vinod Mishra, 2016. "Is there a conditional convergence in the per capita incomes of BIMAROU states in India?," Monash Economics Working Papers 03-16, Monash University, Department of Economics.
    9. repec:mes:postke:v:37:y:2015:i:3:p:384-407 is not listed on IDEAS
    10. Sabyasachi Kar & Debajit Jha & Alpana Kateja, 2011. "Club-convergence and polarization of states: A nonparametric analysis of post-reform India," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(1), pages 53-72, April.
    11. Silvia Dal Bianco, 2016. "Going clubbing in the eighties: convergence in manufacturing sectors at a glance," Empirical Economics, Springer, vol. 50(2), pages 623-659, March.
    12. Vijaya R. Sharma & Alok K. Bohara, 2009. "Himalayan Journal of Development and Democracy Vol 3:1, 2008," Working Papers id:1960, eSocialSciences.
    13. Rowan Cherodian & A. P. Thirlwall, 2015. "Regional disparities in per capita income in India: convergence or divergence?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 37(3), pages 384-407, July.
    14. Parhi, Mamata & Diebolt, Claude & Mishra, Tapas & Gupta, Prashant, 2013. "Convergence dynamics of output: Do stochastic shocks and social polarization matter?," Economic Modelling, Elsevier, vol. 30(C), pages 42-51.
    15. repec:eee:ecmode:v:70:y:2018:i:c:p:429-437 is not listed on IDEAS
    16. Raabe, Katharina, 2011. "The Dynamics of Service Delivery and Agricultural Development in India – A District Level Analysis –," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114783, European Association of Agricultural Economists.

    More about this item

    Keywords

    Convergence clubs; Distribution dynamics; Education; Infrastructure; Panel data; India;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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