CONVERGENCE CLUB EMPIRICS: SOME DYNAMICS AND EXPLANATIONS OF UNEQUAL GROWTH ACROSS INDIAN STATES

This paper documents the convergence of incomes across Indian states over theperiod 1965 to 1998. It departs from traditional analyses of convergence by trackingthe evolution of the entire income distribution, instead of standard regression and timeseries analyses. The findings reveal twin-peaks dynamics – the existence of twoincome convergence clubs, one at 50 per cent, another at 125% of the nationalaverage income. Income disparities across states seem to have declined over thesixties, only to increase over the following three decades. The observed polarizationis strongly explained by the disparate distribution of infrastructure, and that ofeducation, and to an extent by a number of macroeconomic indicators, that of capitalexpenditure and fiscal deficits.[...]