Club-convergence and polarization of states: A nonparametric analysis of post-reform India

Purpose – The purpose of this paper is to study the dynamics of the distribution of per capita income of Indian states in the post-reform period, in order to identify trends towards convergence-club formation, polarization or stratification during this period. Design/methodology/approach – The authors adopt the “distribution dynamics” framework that involves estimating kernel density functions, stochastic kernels and ergodic distributions in order to identify these trends. Findings – The results show that there is polarization in India in the post-reform period and this is due to the contrary growth dynamics of the middle-income states resulting in the “vanishing middle” of the distribution. Originality/value – This is the first study that highlights the contrary growth dynamics among the middle-income states as the driving force behind the polarization of Indian states in the post-reform period.