There is a clear distinction between the richer and the poorer states in India.

This is exemplified by the differences in living standards between the relatively prosperous southern states and the impoverished BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) states.

However, while there is a divergence in growth between the states, a World Bank policy research working paper by Yue Li and others shows that there is convergence at a district and sub-district level.

To show this, the authors use household per capita consumption expenditure, obtained from the National Sample Survey (NSS) rounds in 2004-05 and 2011-12 as a measure of living standards.

They observe that between 2004 and 2012 the living standards strongly converged across districts and sub-districts.

Districts that were poorer in 2004, on average, grew faster between 2004 and 2012. Growth was the fastest in semi-urban areas, which lie between purely rural areas and cities.

The authors contend that the divergence between the states can be explained by the distribution of fast-growing regions. Poorer states are failing to catch up with the richer ones because they have a shortage of fast-growing districts.

The authors also analysed a range of factors to identify the best predictors of local economic growth.

They find that market access, the availability of electricity and connectivity are strong drivers of growth.

Surprisingly, they find that local governance and population density are not important determinants of growth.

Social factors such as the attainment of primary education and indicators of inclusion—such as higher access to finance, lower gender gaps in education, and greater social homogeneity—are strongly correlated with local growth.

Also Read: States Diverge, Cities Converge: Drivers of Local Growth Catch-up in India

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