Convergence Perspective of Growth in India

Abstract

The policy of globalization for India was a mix bag contributing benefits and losses. Increased foreign trade, foreign exchange reserves, market expansion was contrasted with fall in domestic industries, unemployment and increase in inequality. The present study analyzes the presence of convergence or divergence of incomes of the states in India using the concepts of Sigma convergence, Beta convergence, and stochastic convergence for the post-reform period of 1993–1994 to 2014–2015. The study tests for absolute β – convergence by using trend line analysis; regression of CAGR (Compound Annual Growth Rate) as a function of the Average PCSDP (Per Capita State Domestic Product) of initial three years of the observed period and regression of point-to-point growth rate of per capita income to the growth rate of initial three years. A negative relationship shall imply the presence of convergence. Further the study uses panel unit root test and relevant dynamic processes to test for conditional β and stochastic convergences. It reveals the evidence of divergence in income across the states.

Citation

Aich, A. and Pal, M.K. (2022), "Convergence Perspective of Growth in India", Chandra Das, R. (Ed.) Globalization, Income Distribution and Sustainable Development, Emerald Publishing Limited, Leeds, pp. 251-263. https://doi.org/10.1108/978-1-80117-870-920221033