Understanding Regional Inequality in India

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Understanding Regional Inequality in India

• Nirvikar Singh (University of California, Santa
  Cruz)
• Institute for South Asian Studies,
• National University of Singapore
• March 2005

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Outline

• Introduction
• Inequality The State of the Debate
• Alternative Outcome Measures
• Inequality Below the State Level (NSS Regions)
• Inequality Below the State Level (Districts)
• Conclusions

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1. Introduction

• Concerns about growing regional inequality
• Ethical issue we may dislike too much inequality
• Pragmatic issue internal political tensions,
  even conflict, may increase
• Need to have as deep an understanding as
  possible, to guide possible policy responses

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India
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2. Inequality The State of the Debate
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State Level Gini Ratios
7
Convergence Studies
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3. Alternative Outcome Measures
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Inequality in HDIs
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HDI Trends
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Relative Regional Changes 1991-92 to 1998-99
Source The Geography of Post 1991 Indian
Economy Laveesh Bhandari Aarti Khare Indicus
Analytics, April 2002
78 regions
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4. Inequality Below the State Level (NSS Regions)
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Inequality Below the State Level
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Zonal Differences
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Zonal Differences
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5. Inequality Below the State Level (Districts)

• Andhra Pradesh
• 22 districts
• 1993-94 to 2000-01
• Kerala
• 14 districts
• 1990-91 to 2000-01
• Rajasthan
• 27 districts
• 1990-91 to 2000-01
• West Bengal
• 16 districts (excluding Kolkata)
• 1993-94 to 2000-01

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India
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Preliminaries to Results

• Dependent variable is always DDP per capita
  growth rate
• Difference in natural logarithms of per capita
  DDP
• District Domestic Product (DDP) are not deflated
• Nominal per capita DDP growth
• Constant term includes inflation
• Doesnt affect other coefficients
• Other conditioning variables are all 1991
• Census data (human development or infrastructure)
  
• RBI data (financial variables)
• White heteroskedasticity-consistent standard
  errors used

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Andhra Pradesh
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Kerala
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Rajasthan
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West Bengal
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6. Conclusions

• Trends in regional inequality may not be too bad
• Development indicators tell a different story
  than SDP performance
• The problems may not be structural, but a
  function of policy
• Good governance can have rapid positive effects
• Better policy targeting (e.g. poverty
  alleviation, intergovernmental transfer system)
  can help
• Reform is not necessarily the major culprit in
  growing regional inequality further reform can
  help