Growth and Regional Disparities in Odisha: An Analysis in the Post-reform Period

Abstract

The post-reform period has witnessed high economic growth in the net state domestic product (NSDP) of the state of Odisha. With a higher growth in income in the post-reform period, especially in the tertiary sector, the state witnessed high regional disparities among its districts in terms of per capita income (PCI). The regional disparities can be assessed by looking at the convergence/divergence in the PCI of the 30 districts of Odisha. The state has seen a sigma ( σ) divergence in the income of districts during the post-reform period, which points to an increase in income disparities among the districts. To know the sectoral effects of the income divergence, the PCI growths of the 30 districts, over the period from 1993–1994 to 2011–2012, are regressed with the initial PCI of the three sectors—primary, secondary and tertiary—of the 30 districts. The beta ( β) divergence shows a mixed result. The districts having a low PCI in the primary sector show a convergence, meaning these were growing at a faster rate and converged with the districts having a high PCI in the primary sector. On the other hand, the districts having a low tertiary sector PCI show a divergence, which means these were growing at a slower rate while districts having a high PCI in the tertiary sector were growing at a faster rate, causing a divergence altogether. The secondary sector PCI of the districts shows an insignificant result. Combining the growth in the sectors’ income and the disparities among the districts in terms of sectoral PCI shows that the growth in income, especially the tertiary sector income growth during the post-reform period in Odisha, caused income disparities among the districts. JEL: O47, N3, P24, P25