Regional inequality and growth differential in India during 1960–2015: Estimating the role of sectoral components

This study analyses growth, structural dynamics and regional inequality with Indian data for the past five and half decades. The induced growth of labour productivity achieved by means of industrial growth leads to the polarisation of economic growth in some regions with higher proportional shares of manufacturing output in India. Growth performance in India improved during the post-reform period mainly because of the high growth in the services sector, but the data for regional shares of national income indicate that economic growth across Indian states has been highly uneven. Regional inequality has been the highest in output from manufacturing throughout the period. Although the contribution of services sector's income inequality was the highest to overall income inequality in India, the regional variation in manufacturing output plays a significant role in regional growth differential in states’ total income.