Income Convergence in Maharashtra: Myth or Reality?

Abstract

Maharashtra, a fast growing state of India, contributes significantly to the national GDP. However, uniform percolation of the growth streams throughout the state is still an unachieved goal. The present study attempts to empirically estimate convergence of income in the state using Myrdal's (1957) framework, for the period 1993-2013 using sigma convergence, beta convergence and spatial autocorrelations. The result of empirical analysis reveals that beta convergence is insignificant during the 20 years under consideration. The sigma convergence clearly hints at an increase in divergence and formation of 'convergence clubs' in some divisions of the state. The spatial autocorrelations are significant in all the years indicating the presence of spill overs or spread effect. However, the magnitude of these spatial autocorrelations has been very low, implying laggard percolation of the growth process throughout the state.