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.