Economic Geography and the Scaling of Urban and Regional Income in India

Abstract

We undertake an exploration of the economic income (Gross Domestic Product, GDP) of Indian districts and cities based on scaling analyses of the dependence of these quantities on associated population size. Scaling analysis provides a straightforward method for the identification of network effects in socioeconomic organization, which are the tell-tale of cities and urbanization. For districts, a sub-state regional administrative division in India, we find almost linear scaling of GDP with population, a result quite different from urban functional units in other national contexts. Using deviations from scaling, we explore the behavior of these regional units to find strong distinct geographic patterns of economic behavior. We characterize these patterns in detail and connect them to the literature on regional economic development for a diverse subcontinental nation such as India. Given the paucity of economic data for Urban Agglomerations in India, we use a set of assumptions to create a new dataset of GDP based on districts, for large cities. This reveals superlinear scaling of income with city size, as expected from theory, while displaying similar underlying patterns of economic geography observed for district economic performance. This analysis of the economic performance of Indian cities is severely limited by the absence of higher-fidelity, direct city level economic data. We discuss the need for standardized and consistent estimates of the size and change in urban economies in India, and point to a number of proxies that can be explored to develop such indicators.