Development patterns in India: Spatial convergence or divergence?

Abstract

The impact of globalization has led some nations to attain higher rates of growth while others have shown declining growth, along with widening regional disparities within nations. The regional convergence (RC) thesis addresses this issue of measuring inequality among sub-national economies of a nation, and across nations over a long period of time. This thesis utilizes two measures beta and sigma convergence to analyze if poor nations catch up with developed nations, and if regions within a nation close the gap with developed regions. The Indian economy has witnessed increasing economic inequality since independence. Given this overview the objective of this paper is to review recent literature on RC and address the following four questions: (1) What insights do recent studies provide on convergence debate? (2) What are the various explanations and tools to understand and measure regional convergence? (3) What is the role of geography in explaining spatial convergence/divergence analysis of economies? (4) What are the trends of regional inequality in India during the 1961–2011 periods? Domestic Product of States in India (1960–1961 to 2006–2007) and Reserve Bank of India publications provide data for the past fifty years on per capita net state domestic product. Simple measures of dispersion reveal increase in regional inequality during the study period with moderate drops during 1970–1971 and 1980–1981 periods. Descriptive measures indicate persistence and limited upward mobility of states. Also, prosperous regions are located in the rich agricultural and industrial states of Punjab, Gujarat and Maharashtra, and lagging regions are the impoverished agricultural states of Bihar and Madhya Pradesh.