ARE Indian states converging on public expenditure? An empirical evidence

In this paper, an attempt has been made to examine nature and speed of convergence (through σ- and β-measures) among major Indian states with respect to per capita expenditure at aggregated and disaggregated levels. The study has made use of balanced panel data estimation through both fixed and random effects modeling using 3 alternative versions (viz., walhus, amemiya, and nerlove). Although β-convergence did not reveal regional inequalities to have narrowed down in respect of aggregated per capita expenditure; yet σ-convergence has strongly indicated the states to have converged temporally. Notably, at the disaggregated level, the states have shown strong signs of both σ-and β-convergence in respect of per capita expenditure on Social & Community Services, in general, and Education, Sports, Art & Culture (ESR) sector, in particular. The states were also observed to have converged with respect to the values of Human Development Index. Nevertheless, the states have undergone divergence on per capita income.