Convergence Divergence Debate within India

International Journal of Economics and Management Studies

© 2017 by SSRG - IJEMS Journal

Volume 4 Issue 8

Year of Publication : 2017

Authors : Kanupriya Suthar

10.14445/23939125/IJEMS-V4I8P103

How to Cite?

Kanupriya Suthar, "Convergence Divergence Debate within India," SSRG International Journal of Economics and Management Studies, vol. 4,  no. 8, pp. 12-16, 2017. Crossref, https://doi.org/10.14445/23939125/IJEMS-V4I8P103

Abstract:

The notion of convergence or catching up by a state/country with lower initial income and capital per capita with a state/country with comparatively higher initial income and capital per capita gained importance with the introduction of neo-classical theory of growth. Many empirical findings confirmed the notion of convergence between rich and poor countries through cross sectional study of data. But any such tendency of convergence has not been visible for Indian states. There has been growing disparities among rich and poor states within India in spite of growing mobility of labor and growing amount of trade of goods and services. Capital has been concentrated in fewer states and has not shown any sign of free mobility even after governmental efforts to further reduce costs in backward states. The absence of social and overhead capital in backward states seems to have nullified or outweighed the effect of reduced marginal returns to capital in richer states.

Keywords:

Convergence, divergence, regional disparities, neo-classical growth theory, steady state situation.

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