Abstract
AbstractThis study documents the convergence of incomes across Indian states over the period 1965–98. It departs from traditional analyses of convergence by tracking the evolution of the entire income distribution, instead of standard regression and time series analyses. The findings reveal twin‐peaks dynamics—the existence of two income convergence clubs, one at 50%, another at 125% of the national average income. Income disparities seem to have declined over the 1960s, only to increase over the following three decades. The observed polarization is strongly explained by the disparate distribution of infrastructure and to an extent by a number of macroeconomic indicators—that of capital expenditure and fiscal deficits.
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