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Regional Disparity in India

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Regional Disparity in India

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REGIONAL GROWTH AND DISPARITY IN INDIA: A COMPARISON OF PRE AND POST-REFORM DECADES Abstract
Has the regional disparity widened in the post-reform period? This study attempts to probe into this by analysing growth rates of aggregate and sectoral domestic product of major states in the pre (1980s) and post-reform (1990s) decades. Our results indicate that while the growth rate of gross domestic product has improved only marginally in the post-reform decade, the regional disparity in state domestic product has widened much more drastically. Industrial states are now growing much faster than the backward states, and there is no evidence of convergence of growth rates among states. Even more disturbing is that there is now an inverse relationship between population growth and SDP growth. The inverse relationship is stronger for the per capita income growth among states. This has a very serious implication for employment and the political economy of India.

B.B. BHATTACHARYA And S. SAKTHIVEL

INSTITUTE OF ECONOMIC GROWTH UNIVERSITY OF DELHI ENCLAVE NORTH CAMPUS DELHI – 110 007 e-mail: bbb@ieg.ernet.in; sakthivel@ieg.ernet.in

REGIONAL GROWTH AND DISPARITY IN INDIA: A COMPARISON OF PRE AND POST-REFORM DECADES B. B. Bhattacharya and Sakthivel I. Introduction The regional disparity in India is now a matter of serious concern. It is well known that in a large economy, different regions with different resource bases and endowments would have a dissimilar growth path over time. One of the reasons why centralised planning was advocated earlier was that it could restrain the regional disparity. In spite of planning, however, the regional disparity remained a serious problem in India. A new controversy in this respect is whether growth rates and standard of living in different regions would eventually converge or not. The convergence theorem (Barro, 1991) postulates that when the growth rate of an economy accelerates, initially some regions with better resources would...

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