S.Subrahmanyam and N.Rajagopala Rao: Liberalization an Income Convergence Across Indian States, 2000.

Neoclassical theory of growth predicts convergence of per capita incomes across regions in the face of equal accessibility to technology and identical saving rates. This paper examines whether this premise holds in the Indian context. Data on per capita net state domestic product of the major 17 states for the period 1965-66 to 1996-97 were analysed for this purpose. The paper also contrasts the trends in per capita income after the introduction of liberalization measures in 1985 with those observed in the previous period to understand whether agriculture-based growth is more equitable or industry- led growth is more equitable. The results indicate no evidence of convergence of per capita incomes across Indian States in either period. However, while the tendencies of divergence are mild and not statistically significant in the green revolution period, they are strong in the liberalization period (Working paper No. 36).