Differential Growth Performance of Indian States during 1980-2018: A Club Convergence within Overall Divergence of Per Capita Incomes

Abstract

Breaking free from the long stagnating growth rate of the previous three decades, India in the 1980s shifted to a higher growth trajectory. After embarking upon the market-oriented economic reform program in 1991, the country sustained high growth for about 25 years. The present paper examined growth performances at the sub-national level and found that the performances were uneven across states. States attracting higher FDI flows and having enriched human resources grew faster than the others. On the whole, real per capita incomes across states tended to diverge. But states comprising the western-southern part of the country and a pocket of two other states in the north broke away from the rest of the states towards club convergence at higher per capita income levels. However, real per capita incomes in states forming the central and eastern parts of the country continued to lag behind the all- India average real per capita income.