Regional dynamics and spillovers in India's economic growth

Using a panel of district-level data, this paper examines the effects of spatial dimensions on the regional dynamics of economic growth in India. Our findings show an absolute convergence in regional economic growth, and its speed increases significantly with the integration of spatial dimensions. Further structural changes in economies in favour of agriculture also speed up the convergence process. The services sector is the main driver of economic growth in India, but it is concentrated in and around large urban centres and does not impact the speed of convergence much. These findings suggest that spatial interconnectedness can be improved by investing more in infrastructure, agricultural research and extension systems and human resources in the regions lagging in economic development; and the developmental gap between rich and poor regions can be bridged by dismantling the regulatory barriers to inter-regional trade and flow of capital, labour and technologies.