There are few questions more compelling to economists than to explain why some countries grow faster than others. Understanding different patterns of cross-county or cross-regional growth is important—persistent disparities in income across countries and across regions lead to wide disparities in welfare and is often a source of social and political tension, particularly so within national boundaries. The existence of regional inequalities of incomes across Indian states has been well documented. It is well known that western states are industrially advanced, while the northwest is agriculturally prosperous. There are pockets of relative success in agriculture and industry in the south and the north, while the northeastern states are yet to excel in either.
Recording that regional inequalities exist is just the starting point; what is of concern is that they continue to persist even after five decades of concerted state-led planning. Such differential development, given widespread interstate socioethnic and political differences, risks unleashing highly destructive centrifugal political forces. It is, therefore, vitally important that policies for containing and counteracting regional disparities are implemented in the early rapid phase of development.
This study documents the dynamics of growth and convergence of real per capita incomes across Indian states over the period 1965-97, and attempts to find some factors underpinning such income dynamics. There are a number of specific goals. First, we are interested in the dynamics of equality of incomes across Indian states. In other words, is there any tendency towards equality in the cross section income distribution across the Indian states? If not, what distribution pattern do they exhibit?
Second, if cohesive tendencies are not obtained, we would like to characterize the possibilities for inter-regional mobility: are there any signs of poorer regions overtaking