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Economic Reforms, Growth and Regional Divergence in India

Madhusudan Ghosh is a Professor of Economics, Department of Economics & Politics, Visva-Bharati University, Shantiniketan, West Bengal 731235; e-mail: msghosh123{at}rediffmail.com; ghosh_m55{at}yahoo.co.in

This paper examines long-run growth performance and regional divergence in per capita income across 15 major Indian states during the pre- and post-reform periods. Evidence shows that the divergence has increased the post-reform period. The divergence has been due to inter-state variations in production structures, human capital and infrastructure. Larger public investment in human capital and infrastructure for states with lower steady-state could improve overall growth performance and reduce regional imbalances. Ongoing economic reforms that seem to have led to an increase in growth as well as regional disparities of income need to be modified appropriately.

Key Words: Convergence • Economic Reforms • Growth • Unit-root • JEL Classification: C22 • JEL Classification: O11 • JEL Classification: O47 • JEL Classification: O53

Margin: The Journal of Applied Economic Research, Vol. 2, No. 3, 265-285 (2008)
DOI: 10.1177/097380100800200303


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