Regional Dimensions Growth Inclusion and Sustainability 1709094451

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REGIONAL DIMENSIONS:
ECONOMIC GROWTH, INCLUSIVE
AND SUSTAINABLE DEVELOPMENT
S. Mahendra Dev
Distinguished Professor, ICFAI, Hyderabad, Editor, Economic and Political Weekly,

Former Chairman, CACP, GOI, Former Vice Chairman, IFPRI, Washington D.C., Former
Vice Chancellor, IGIDR, Mumbai.
Presidential Address
At the 58th Annual Conference of the Indian Econometric Society (TIES),

Tripura University, Agartala
February 22-24
1
Regional Dimensions in India:

Economic Growth, Inclusive and Sustainable Development
S. Mahendra Dev
It is a great honour and privilege to deliver the Presidential Address at the 58th Annual
Conference of the Indian Econometric Society (TIES). I am grateful to the Society for conferring
this honour on me. TIES is one of the oldest and most reputed professional societies in the
country. Eminent econometricians, economists, Trustees, office bearers of the society and other
stakeholders have strengthened TIES since 1960. The annual conferences of TIES provide
opportunities for young scholars to present research papers and interact with experts from India
and abroad. I remember the wide participation of experts, senior and young researchers and
students when we organised the 50th annual conference (Golden Jubilee) of TIES at IGIDR,
Mumbai in 2013. Personally, I have learned a lot from the activities and publications of the
Society in the last four decades. I am happy to note that this conference has a session on the
contributions of Prof. C.R. Rao, the doyen of statistics. I would like to acknowledge that my
knowledge in econometrics is due to the excellent teaching of Prof. K.L. Krishna and late Prof.
A.L.Nagar at the Delhi School of Economics.
Keeping in view of the broader interests of TIES, I have chosen to speak on “Regional
Dimensions: Economic Growth, Inclusive and Sustainable Development. My Ph.D. topic was on
inter-regional disparities in India. I am happy to revisit on regional dimensions after 40 years in a
comprehensive way covering growth, inclusion and sustainability.
1. INTRODUCTION1
The existence of wide inter-regional variations (inter-state and intra-state) in a vast country like
India is well recognized. All the Five Year Plans of the erstwhile Planning Commission and
presently Niti Aayog stressed the importance of balanced regional development. Plans and
policies were designed to provide more investments to the relatively backward areas. Inspite of
these policies, regional disparities is a serious problem in India. In the post-reform period, the
degree of control of Central Government declined in many areas due to deregulation in many
sectors of the economy. State governments were supposed to take more initiatives for economic
development and social policy in the post-reform period. Also, the role of private sector is
becoming more important as compared to the public sector. In this context, apart from central
government interventions, state level policies are crucial for attracting both domestic and foreign
direct investment. The role of public policy is also vital for reducing regional disparities.
India is now aspiring to achieve the status of a developed nation by 2047, at the 100th anniversary
of its independence. It wants to achieve higher growth with inclusion and sustainability. A report
of the Confederation of Indian Industry (CII) says that India’s GDP can grow from the current $3
trillion to $5 trillion by 2026-27, to $9 trillion by 2030 and to $40 trillion by 2047 if its
population is productively employed. The role of states is crucial to achieve the status of a
developed nation by 2047 with inclusive and sustainable development.

1 I thank Dr. C.Ravi and Dr. P.Aparna of the Centre for Economic and Social Studies,
Hyderabad, Dr. VDMV Lakshmi of ICFAI Business School, Hyderabad, Mr. Dennis
Rajakumar, Director of EPWRF for providing estimates on regional
convergence/divergence of per capita GSDP.
2

In the above context, this address examines regional variations in growth, inclusion and
sustainability in the last few decades and suggests policy measures for reducing the regional
disparities. The analysis is done mostly at state level. But, wherever information is available, we
look at disparities below state level also.

Specifically, we address the following issues.
(a) Economic growth: Is per capita GSDP (gross state domestic product) converging or diverging
across states?
(b) Inclusive development: what are the regional disparities in agriculture, achieving zero
hunger, poverty, income inequalities and, human development?
(c) Sustainable development and climate change: Which states are more vulnerable to
environment problems and climate change?
(d) Fiscal Federalism: What are the mechanisms needed for allocation of resources across states
and local bodies?
2. CONVERGENCE HYPOTHESIS FOR INCOME ACROSS INDIAN STATES
The analysis on regional convergence/divergence gained importance with the development of the
neoclassical growth literature based on Solow model (Solow, 1956), which predicts poorer
economies grow faster than the richer economies. In other words, the growth rate in per capita
incomes tends to be inversely related to the initial levels of per capita incomes. Some studies
have examined the convergence of income for countries such as the US and Japan and found
evidence of regional convergence for long periods and shorter sub-periods (Barro and Sala-i-
Martin, 1992, 1992a, 1995)2. There have been a number of studies on convergence/divergence
hypothesis using data on states of India3.
We examined here whether Indian states are converging in per capita GSDP over a longer period
2000-2020 and short sub-periods 2000-06, 2006-12, 2006-2020, 2011-2020 and 2014-2020.
Many studies have looked at convergence only in per capita GSDP. We have looked at
convergence not only in overall per capita GSDP but also at sectoral level Viz., per capita
agriculture GSDP, per capita industry GSDP and per capita services GSDP. The analysis is done
for 20 major states4. The data is obtained from the EPW Research Foundation, which collected
from RBI statistics.
Following Rao et al (1999), we estimated β convergence using the following three equations.

2 Also see Krugman, Paul (1991, 1991a), Rodrik (2013)
3 See Cashin and Sahay (1996), Rao et al (1999), Bharadwaj (1982), Marjit and Mitra (1996),
Ahluwalia (2000), Nagaraj et al (1998), Kar et al (2011), Kar and Sakthivel (2007), Mishra &
Mishra (2011), Ghosh, T and Kaustab (2023), Dore and Narayanan, 2021, Krishna (2004), Roy
and Subramaniam (2016), Singh, Nirvikar et al (2003), Mundle et al (2016). Bhide (2019)
emphasized the need for reflecting a regional dimension in macroeconometric models.
4 The 20 major states are : Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Haryana,
Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab,
Rajasthan, Tamil Nadu, Telangana, Uttarakhand, Uttar pradesh, West Bengal.
3
!!"
(1) ln !!,!!!
= ∝! + 𝛽 ln 𝑌!,!!! + 𝜀!,!
Where, 𝑌!" is per capita SDP or per capita Agri SDP or per capita industry SDP or per
capita service SDP for a state i at time t
𝑡 − 𝑇 is length of the time period
∝! is steady growth rate of state i
𝛽 is Beta convergence and
𝜀!,! is error term
𝑌!"
(2) ln = ∝! + 𝛽 ln 𝑌!,!!! + ln(𝐴𝑔!,!!! ) + 𝜀!,!
𝑌!,!!!
where Agi, t-‐T is share of agricultural GSDP in total GSDP in the ith state in the
beginning of the interval.
𝑌!"
3 ln = ∝! + 𝛽 ln 𝑌!,!!! + ln(𝑆!" ) + 𝜀!,!
𝑌!,!!!

where Sit is a standardized measure of sectoral composition to minimize inter-‐
state differences in the steady state values of Xi* and Yi*.

We also estimated σ convergence represented by the standard deviation. In addition,
coefficient of variation across states for different time points.

2.1.Convergence/divergence of income across Indian states
The results in Table 1 reveal the following.
The estimated regression equation 1 shows that per capita GSDP in Indian states have been
diverging rather than converging for longer period of 2001-2020 as shown by the significant
positive coefficients (Table 1). It is significant for all sub-periods except 2006-2012 and 2014-
2020. Coefficient is not significant for these two sub periods indicating that it is neither
converging nor diverging. Positive coefficient indicates that growth in per capita GSDP in the
states is positively related to their initial levels. It reveals that states with initial per capita GSDPs
tended to grow faster than those with lower per capita GSDP.
The results of the regression equation 2 shows that the coefficient is significant positive for the
longer period 2000-2020 even after controlling for the share of agriculture. It is not significant
only for few sub-periods (Table 1).
The results for the third equation with a measure of sectoral composition as control also indicates
that the states are diverging in the longer period of 2000-2020 and some of the sub-periods
(Table 1).
Fig 1 also shows positive relationship between initial levels of income and growth of income
during the period 2000-01 to 2019-20.
4
Table 1. Regression equation of convergence/divergence for per capita GSDP [Dependent Variable:
Ln(Yit/Yi, t-T)]
Period Constant Initial Share of Sectoral Adjusted R2 F

Income Level Primary Share Index
[Ln(Yi, t-T)] Sector in [Ln(Sit)]
Total SDP
[Ln (Agi, t-T)]
2000-01 to 2019-20
1 -0.1025 0.0151** 0.2069 5.9571*
(-1.5766) (2.4407)
2 0.0290 0.0142** -0.1329 0.2175 3.6399*
(0.2159) (2.2981) (-1.1147)
3 -0.0713 0.0150** -0.4905 0.1729 2.9868
(-0.7919) (2.3889) (-0.5109)
2000-01 to 2005-06
1 -0.2966 0.0328* 0.3095 9.5148*
(-2.6495) (3.0846)
2 0.0799 0.0303* -0.3808*** 0.4065 7.5064*
(0.3699) (3.0523) (-1.9856)
3 -0.3863 0.0321* 1.5710 0.3167 5.4023*
(-2.7904) (3.0330) (1.0907)
2006-07 to 2019-20
1 -0.0496 0.0098** 0.1624 4.6851*
-1.0103 (2.1645)
2 0.0247 0.0087*** -0.0690 0.1292 2.4101
0.1741 (1.7530) (-0.5600)
3 -0.0015 0.0096*** -0.7317 0.1333 2.4603
-0.0162 (2.0819) (-0.6271)
2006-07 to 2011-12
1 -0.0160 0.0073 -0.0066 0.8764
(-0.1898) (0.9361)
2 0.1079 0.0055 -0.1151 -0.0476 0.5687
(0.4428) (0.6437) (-0.5435)
3 0.0137 0.0074 (-0.4280) -0.0476 0.5687
(0.0978) (0.9232) (-0.2704)
2011-12 to 2019-20
1 -0.0683 0.0108** 0.1571 4.5423*
(-1.2016) (2.1313)
2 -0.0975 0.0249 0.0113*** 0.1267 2.3785
(-0.5541) (0.1684) (1.9565)
3 -0.0257 0.0103 -0.6612 0.1180 2.2713
(-0.2310) (1.9483) (-0.4492)
2014-15 to 2019-20
1 -0.0228 0.007 0.0047 1.0893
(-0.3000) (1.0437)
2 -0.1089 0.0088 0.0729 -0.0461 0.5816
(-0.4288) (1.0297) (0.3562)
3 -0.0294 0.0070 0.1092 -0.05369 0.5159
(-0.2015) (1.0157) (0.0535)
Notes: 1. Figures in parenthesis represent t values of the regression coefficients
5
2. *, **, and *** indicates significant at 1%, 5% and 10% level, respectively.
Fig 1: Relationship Between Level of Income and Growth of Income Across Major States of India -
2000-‐01 to 2019-‐20
0.09
0.08
0.07
Growth Rate-‐2000-‐2020
0.06
0.05
0.04
0.03
0.02
0.01
0.00
9.4 9.6 9.8 10.0 10.2 10.4 10.6 10.8 11.0 11.2
Log Per Capita SDP Across Major States of India 2000-‐01
Source: Author’s estimates

2.2. Convergence/divergence of Agricultural Per Capita GSDP across States

The estimates on unconditional convergence for agricultural per capit GSDP
reveal that the coefficient of initial income level is negative but not significant
(Table 2). It shows that per capita GSDP for agriculture is neither converging nor
diverging across states. It is positively significant for the sub-‐period 2014-‐2020
indicating divergence of states.
Table 2. Regression equation of convergence [Dependent Variable is Per Capita AGSDP, Ln(Yit/Yi, t-
T)]
Period Constant Initial Income Level Adjusted R2 F
Ln(Yi, t-T)
2000-01 to 2019-20 0.1218 -0.0106 0.0209 1.4047
(1.4714) (-1.1852)
2000-1 to 2005-06 0.1793 -0.0173 -0.0089 0.8317
(1.0226) (-0.912)
2006-7 to 2019-20 0.0301 -0.0006 -0.0554 0.0031
(0.3085) (-0.0553)
2006-7 to 2011-12 0.1524 -0.0138 0.0631 2.2787
(1.7794) (-1.5095)
2011-12 to 2019-20 -0.1105 0.0144 0.0065 1.1239
(-0.8596) (1.0601)
2014-15 to 2019-20 -0.3126 0.036** 0.1475 4.2869*
(-1.8862) (2.0705)
Notes: 1. Figures in parenthesis represent t values of the regression coefficients.
6
2.3. Convergence/divergence of Industrial Per Capita GSDP across States
The estimates for per capita industrial GSDP show that the coefficients are negative
but not significant (Table 3). It shows that it is not showing either convergence or
divergence on industry per capita GSDP across Indian states.
Table 3. Regression equation of convergence [Dependent Variable is Per Capita INDSDP Ln(Yit/Yi, t-
T)]
Ln(Yi, t-T)
2000-01 to 2019-20 0.0593 -0.0002 -0.0555 0.001
(0.965) (-0.0313)
2000-1 to 2005-06 -0.0508 0.0123 0.0055 1.1055
(-0.4678) (1.0514)
2006-7 to 2019-20 0.0605 -0.001 -0.0535 0.0346
(1.1338) (-0.1859)
2006-7 to 2011-12 0.1365 -0.008 -0.0236 0.5613
(1.3144) (-0.7492)
2011-12 to 2019-20 0.0213 0.0024 -0.0485 0.1203
(0.305) (0.3469)
2014-15 to 2019-20 0.0928 -0.0036 -0.0472 0.143
(0.9613) (-0.3782)

2.4. Convergence/divergence of Services Per capita GSDP across States
The results for per capita services per capita GSDP show divergence and inequalities
in per capita income in services have increased in the longer period and most of the
sub-periods Table 4. The sub-periods 2006-2012 and 2014-2020 do not show either
convergence or divergence
Table 4: Regression equation of convergence [Dependent Variable is Per Capita Services GSDP
Ln(Yit/Yi, t-T)]
Ln(Yi, t-T)
2000-01 to 2019-20 -0.0802 0.0153** 0.2045 5.8857*

(-1.332) (2.426)
2000-1 to 2005-06 -0.2244 0.0296* 0.293 8.8731*
(-2.3731) (2.9788)
2006-7 to 2019-20 -0.0318 0.01*** 0.1342 3.9448*
(-0.6376) (1.9861)
2006-7 to 2011-12 0.0304 0.005 -0.0285 0.4731
(0.4218) (0.6878)
2011-12 to 2019-20 -0.0833 0.0138* 0.28 8.3904*
(-1.6933) (2.8966)
2014-15 to 2019-20 -0.0213 0.0074 0.0551 2.1081
(-0.3974) (1.4519)
7


2.5. Standard Deviation( σ convergence) and Coefficient of Variation in Per
Capita GSDP and, Per Capita GSDP of different sectors.

In order to measure disparities across states, we estimated standard deviation
(SD) and coefficient of variation (CV) for longer period (2000-‐2020). The
findings are given below.

a. The levels of Standard deviation show that it is the highest for per capita
industry followed by services and agriculture (Fig 2)

b. SD Increased over time for per capita GSDP. In the case of agriculture, SD
declined in the period 2007-‐13 but increased signi0icantly during the period
2014-‐20. Although the levels are higher, the SD for per capita industry GSDP
has more or less remained at the same level during 2000-‐12 but stayed at
higher level during 2014-‐2000 (Fig 2).

c. SD gradually increased in the case of per capita GSDP and per capita services
GSDP over time (Fig 2).

d. The weighted CV is lower than unweighted CV for per capita GSDP and per
capita GSDP for sectors (Figs 3, 4, 5 and 6)

e. Both weighted and unweighted CV increased signi3icantly over time for per
capita GSDP and per capita services GSDP (Figs 3 and 6)

f. In the case of agricultural per capita GSDP, the CV similar to SD shows
decline during 2007-‐13 and increase during 2014-‐20.

g. Unlike the SD, the CV for per capita industry GSDP shows increase over time.

Values Standard Deviation of LN Per Capita SDP

0.35
0.45
0.55
0.3
0.4
0.5
0.300
0.325
0.350
0.375
0.400
0.425
0.450
0.475
0.500
0.525
0.550
0.575
0.600
0.625
0.650
2000-‐2001
2001-‐2002 2000-‐2001

2002-‐2003 2001-‐2002
2003-‐2004 2002-‐2003
SDP
2004-‐2005 2003-‐2004
2005-‐2006
2004-‐2005
2006-‐2007
2005-‐2006
2007-‐2008
2006-‐2007
COV of Per Capita SDP

2008-‐2009
2007-‐2008
2009-‐2010
2008-‐2009
2010-‐2011
Agriculture and allied
2009-‐2010
2011-‐2012
Years
2012-‐2013 2010-‐2011
2013-‐2014 2011-‐2012
Industry
2014-‐2015 2012-‐2013
Fig 2. Interstate Disparities (Standard Deviations) in Per Capita SDP
2015-‐2016 2013-‐2014
2016-‐2017 2014-‐2015
Weighted COV of Per Capita SDP

2017-‐2018 2015-‐2016
Fig 3. Interstate Disparities (Coefficient of Variations, COV) in Per Capita SDP
Services
2018-‐2019
2016-‐2017
2019-‐2020
8
2017-‐2018
2020-‐2021
2018-‐2019
2021-‐2022
2019-‐2020

Values
Values
0.35
0.37
0.43
0.45
0.47
0.39
0.41
0.49
0.35
0.45
0.55
0.65
0.4
0.5
0.6
Sector SDP
Sector SDP
2000-‐2001
2000-‐2001
2001-‐2002
2001-‐2002
2002-‐2003

2002-‐2003
2003-‐2004
2003-‐2004
2004-‐2005
2004-‐2005
2005-‐2006
2005-‐2006
2006-‐2007
2006-‐2007
2007-‐2008
2007-‐2008
COV Per Capita Primary
COV Per Capita Secondary

2008-‐2009
2008-‐2009
2009-‐2010
2009-‐2010
2010-‐2011
2010-‐2011
2011-‐2012
2011-‐2012
2012-‐2013
2012-‐2013
2013-‐2014
2013-‐2014
2014-‐2015 2014-‐2015
2015-‐2016 2015-‐2016
2016-‐2017 2016-‐2017
2017-‐2018 2017-‐2018
Weighted COV of Per Capita Primary
2018-‐2019
Weighted COV of Per Capita Secondary

2018-‐2019
Fig 4. Interstate Disparities (Coefficient of Variations, COV) in Per Capita Primary
Fig 5. Interstate Disparities (Coefficient of Variations, COV) in Per Capita Secondary
2019-‐2020 2019-‐2020
9
2020-‐2021 2020-‐2021
2021-‐2022 2021-‐2022
10
Fig 6. Interstate Disparities (Coefficient of Variations, COV) in Per Capita Tertiary

Sector SDP
0.6
0.55
0.5
Values
0.45
0.4
0.35
2000-‐2001
2001-‐2002
2002-‐2003
2003-‐2004
2004-‐2005
2005-‐2006
2006-‐2007
2007-‐2008
2008-‐2009
2009-‐2010
2010-‐2011
2011-‐2012
2012-‐2013
2013-‐2014
2014-‐2015
2015-‐2016
2016-‐2017
2017-‐2018
2018-‐2019
2019-‐2020
2020-‐2021
2021-‐2022
COV of Per Capita Tertiary Weighted COV of Per Capita Tertiary
2.6. Regional Disparities in Per Capita State Domestic Product using Comparable
Estimates
Ministry of Statistics and programme implementation (MoSPI) supplies comparable data of per
capita GSDP to the finance commissions of India. A look at the ranks of per capita GSDP
between two periods 1999-2002 (12th Finance Commission report) and 2016-19 (15th Finance
Commission report) at state level reveals the following.
(a) The top five states in the triennial average 1999-2002 are Punjab, Maharashtra, Haryana,
Himachal Pradesh and Kerala (Table 5) while the top five states in the triennial average
2016-19 are Haryana, Kerala, Karnataka, Himachal Pradesh and Telangana.
(b) The bottom five states in the triennial average 1999-2002 are Assam, Jharkhand, Odisha,
Uttar Pradesh and Bihar while the bottom five states in the triennial average 2016-19 are
Madhya Pradesh, Assam, Jharkhand, Uttar Pradesh and Bihar.
(c) The ranks of Odisha, Uttarakhand, Karnataka, Kerala increased significantly between the
two periods while that of Punjab, Maharashtra and West Bengal declined. Haryana improved
two ranks over this period.
(d) It is true that there were some interesting movements of some states. However, the
coefficient of variation increased significantly from 0.46 in 1999-2002 to 0.67 in 2016-19. It
shows regional disparities in per capita GSDP have increased over time.
11
Table 5: Per-Capita GSDP (Comparable Data) from 12th and 15th Finance Commissions
States Per capita GSDP (Rs.) Ranks
1999-2002 2016-19 Triennial 1999-2002 2016-19 triennial
Triennial average average triennial average average
(12th Finance (15th Finance
Commission data) Commission data)
Punjab 28030 156989 1 9
Maharashtra 26994 194997 2 7
Haryana 26256 225547 3 1
Himachal Pradesh 24762 197943 4 4
Telangana -- 197505 -- 4a
Kerala 22824 205114 5 2
Gujarat 22708 182534 6 8
Tamil Nadu 22587 195377 7 6
Karnataka 20703 204419 8 3
Andhra Pradesh 18869 152436 9 10
West Bengal 17377 99865 10 14
Uttarakhand 16998 196658 11 5
Rajasthan 15059 110086 12 11
Chhattishgarh 14918 101121 13 13
Madhya Pradesh 13340 86077 14 15
Assam 12288 84552 15 16
Jharkhand 11717 72990 16 17
Odisha 11234 101416 17 12
Uttar Pradesh 10798 65351 18 18
Bihar 6539 39951 19 19
All India 16978 125246 -- --
Source: 12th and 15th Finance Commissions for columns 2 and 3; Ranks in columns 3 and 4 are given
by the author.
2.7. Determinants of Economic Growth Across States
There have been a number of studies, which examined determinants of economic growth. Rao et
al (1999) show that pattern of private investment is a major determinant which is influenced by
per capita public expenditure on social and physical infrastructure. Human capital represented by
literacy is also an important determinant of disparities5. Panda and Sahay (2022) indicate that
infrastructure development, social sector expenditure, urbanization and financial inclusion
accelerate state income growth while state fiscal deficit slows down the growth. Chakravarthy
and Chakravarthy (2018) reveal that state-wise public spending on capital expenditure, state wise
gross fixed capital formation, credit-deposit ratio, reduction in infant mortality rate strengthen
economic growth.
Investments and Exports at State Level

It is known investment and exports are the prime engines of growth in Indian economy. Here we
look at the state level data on trade.
One indicator that reflects investments at state level is credit-deposit ratio (CD). Souther region
has the highest CD ratio (93.6%) followed by Western region (82.8%) (Table 6). Eastern region
has the lowest CD ratio compared to all India ratio of 75.8%.

5 Also see Krishna (2004), Krishna et al (2022),
12
Table 6. Credit-Depost Ratio Across Regions in India (Place of Utilisation): 2023

Regions Credit-Deposit Ratio (%)
Southern region 93.6
Western region 82.8
Northern region 77.5
Central region 56.1
North-East region 50.0
Eastern region 47.5
All India 75.8
Source: RBI, 2023
Exports are also concentrated in a few states. Three states Gujarat, Maharashtra and Tamil Nadu
constitute 58% of total exports in the country (Table 7)6. The top ten states in absolute export
numbers accounted for over 85% of India’s total exports in 2022-23 (Table 7).
Table 7: Share of Top Ten States in Exports (%): 2022-23
States Share of Exports (%)
Gujarat 33.10
Maharashtra 16.06
Tamil Nadu 9.02
Karnataka 6.23
Uttar Pradesh 4.81
Andhra Pradesh 4.40
Haryana 3.52
West Bengal 2.82
Telangana 3.29
Odisha 2.61
Source: 1) Various Issues of Economic Survey, Department of Economic Affairs, Ministry of Finance, Govt. of India. 2) d
Ministry of Commerce and Industry, Govt. of India.
Regaring district level, out of the 680 districts which, exports commodities, the top hundred
districts contributed around 87% of total exports from India. In other words, 580 districts have
only 13% contribution to India’s total exports. The top ten districts accounted for 38% of the
country’s exports (Table 8).
Table 8: Share of Top 10 Districts in Exports (%): 2021-22

Districts State Share in Exports (%)
Jamnagar Gujarat 12.18
Surat Gujarat 4.57
Mumbai Suburban Maharashtra 3.75
Mumbai Maharashtra 3.70
Pune Maharashtra 2.73
Bharuch Gujarat 2.37
Kanchipuram Tamil Nadu 2.36
Ahmedabad Gujarat 2.28
Gautam Buddh Nagar Uttar Pradesh 2.18
Bengaluru Urban Karnataka 1.90
Source: NITI Aayog (2023)
Thus, investments and exports are concentrated in a few states. The states with high trade attract
high investments in both physical and human capital, which would also lead to better industrial

6 Also see Veeramani e al (2016)
13
development. To overcome this, India needs to make efforts to diversify its export basket and
promote exports in several states.
2.7. Aspirations of States to Achieve Higher Growth in State Domestic Product
If India wants to become a developed country by 2047, states should have preparations to
achieve higher growth in state domestic product7.
The Chief Minister of Tamil Nadu announced in 2021 an ambitious target to make Tamil Nadu a
US$1 trillion economy by 20308. Rangarajan and Shanmugam (2023) examined whether Tamil
Nadu economy would become a one trillion dollar economy by 2030. It estimates different
scenarios for achieving this target. In the first scenario, 15.9% nominal growth and a real growth
of 10.9% are required to achieve this goal with the assumption of fixed exchange rate. The
second scenario assumes 2% depreciation of the rupee. Under this scenario, nominal growth
would be 18.2% and required real growth would be 13.2% which, is very ambitious target. This
study also estimated alternative scenarios using real growth rates of (a) 6.5% (close to the
current level); (b) 8%; (c) 9% (as per medium term fiscal plan of Tamil Nadu Government); (d)
10%. According to the study, the 9% real growth is possible and the target of US$1 trillion
economy can be achieved by 2033-34. The estimates for this scenario are given in Table 9. The
table shows that the per capita GSDP of Tamil Nadu in the terminal year will be US$13,400.
This is slightly higher than US$ per capita income required to classify as developed country as
of now. The study also shows that with a real growth rate of 8%, the target of attaining US$1
trillion would get postponed by one more year to 2034-35.
Table 9. Nine per cent Growth Scenario to Achieve a US$ 1Trillion for Tamil Nadu
Year Nominal Nominal Nominal Real Exchange Nominal Per capita Per capita
GSDP GSDP Growth Growth Rate (US GSDP) GSDP GSDP
(Rs.crore) (Rs. Rate (%) Rate (%) US$ (Rs.) (US$)
Trillion) Trillion)
2022-23 2484807 24.84807 14.0 9.0 80.73 0.31 323290 4005
2023-24 2832680 28.32680 14.0 9.0 82.34 0.34 367456 4462
2024-25 3229255 32.29255 14.0 9.0 83.99 0.38 417664 4973
2025-26 3681351 36.81651 14.0 9.0 85.67 0.43 474731 5541
2026-27 4196740 41.96740 14.0 9.0 87.38 0.48 540448 6185
2027-28 4784284 47.84284 14.0 9.0 89.13 0.54 615255 6903
2028-29 5454083 54.54083 14.0 9.0 90.92 0.60 700427 7704
2029-30 6217655 62.17655 14.0 9.0 92.73 0.67 797391 8599
2030-31 7088127 70.88127 14.0 9.0 94.59 0.75 907780 9597
2031-32 8080464 80.80464 14.0 9.0 96.48 0.84 1034909 10727
2032-33 9211729 92.11729 14.0 9.0 98.41 0.94 1179841 11989
2033-34 10501372 105.1372 14.0 9.0 100.38 1.05 1345071 13400
Source: Rangarajan and Shanmugam (2023)
3. REGIONAL VARIATIONS IN INCLUSIVE DEVELOPMENT
Economic growth is only a means to achieve well being of the entire population. Therefore,
inclusive development is essential for achieving this goal. Before going to the components, we
discuss the concepts of inclusive growth and inclusive development. According to one

7 On strategies for 2047, see Debroy (2023)
8 The Chief Minister of Uttar Pradesh announced that the state would become one trillion dollar
economy by 2027.
14
definition, the inclusive growth is in line with the absolute definition of pro-poor growth, but not
the relative definition (Ianchovichina and Lundstrom, 2009). If we consider absolute definition,
growth is considered to be pro-poor as long as poor people benefit in absolute terms, as reflected
in some agreed measures of poverty (Ravallion and Chen, 2003). On the other hand, under the
relative definition, growth is pro-poor if and only if the incomes of poor people grow faster than
those of the population as a whole. In other words, inequality has to decline under this definition
of inclusive growth.
Kanbur and Rauniyar (2009) explain the differences among pro-poor growth, inclusive growth
and inclusive development. According to them, pro-poor growth is identified as growth that also
reduces income poverty. Inclusive growth is defined as growth that is accompanied by lower
income inequality, so that growth in incomes accrues disproportionately to those with lower
incomes. The concept of inclusive development differs from inclusive growth. The focus of
inclusive development is not confined to income alone as it includes other dimensions of well-
being, in particular education and health. Inclusive development, thus, refers to the improvement
of the distribution of well-being in income and non-income dimensions. Sustainable
Development Goals (SDGs) identify a number of these dimensions. They also provide a good
framework for measuring and achieving inclusive development.
As part of inclusive development, we discuss regional variations in agriculture, achieving zero

hunger, poverty, inequality, employment and, human development.
3.1. Agriculture
Agriculture not only contributes to overall growth of the economy but also provides
employment and food security to majority of the population in the country. Thus, agriculture
plays a pivotal role in Indian economy and this sector’s better performance is vital for inclusive
development.
India’s agricultural transformation from food deficit country in the 1960s to food self
sufficiency is well known with achievements like green revolution, white revolution, growth in
maize, poultry, cotton revolution, high growth in horticulture and live stock. India is the largest
producer of milk, cotton and pulses, second largest in rice, wheat, fruits and vegetables.
There has been significant diversification in agriculture in value terms towards fruits and
vegetables and livestock.
But, agriculture growth varies across states. Bihar, Himachal Pradesh, Punjab, Uttarakhand,
Uttar Pradesh, West Bengal showed low growth rates (Table 10). The irrigation ratio (gross
irrigated area as per cent of gross cropped area) is less than 25 per cent for states like Assam,
Himachal Pradesh, Jharkhand, Kerala, Maharashtra. It is 29 per cent for Odisha and less than 40
per cent for Chattisgarh and Karnataka (Table 10)
Table 10: Growth Rates of gross state Value Added in Agriculture, and irrigation coverage
States Growth rate Gross
in Irrigated
Agriculture and Area as% of Gross
Allied. Cropped Area
2019-20
Andhra Pradesh 8.33 52.3
Assam 5.79 13.7
Bihar 1.95 74.5
Chattisgarh 4.58 35.3
Gujarat 4.28 61.0
Haryana 3.08 94.9
15
Himachal Pradesh 2.26 22.8

Jharkhand 4.68 15.3
Karnataka 5.33 36.4
Kerala -2.01 19.9
Madhya Pradesh 8.28 52.0
Maharashtra 4.58 20.3
Odisha 4.77 29.2
Punjab 2.11 98.6
Rajasthan 5.12 42.8
Tamil Nadu 4.99 57.4
Telangana 6.23 61.3
Uttarakhand 0.99 52.6
Uttar Pradesh 2.48 84.8
West Bengal 2.79 65.7
All India 3.5 53.1
Source: Chand and Singh (2023)
However, there are several challenges for agriculture sector. The green revolution approach has
led to water logging, soil erosion and ground water depletion, indiscriminate use of chemical
fertilisers and pesticides leading to unsustainability of agriculture. Climate change is another
challenge for Indian agriculture. Inspite of increasing production and productivity, continuing
food and nutrition insecurity is a concern.
The Economic Survey (GOI, 2023) calls for reorientation due to challenges like climate change,
rising input costs, fragmented land holdings, sub-optimal farm mechanization, low productivity,
and disguised unemployment. The RBI Report on Currency and Finance says that “the
agriculture sector suffers from low capital formation, declining R&D, low crop yields,
inadequate crop diversity and intensity, with excessive dependence on subsidies and price
support schemes” (p.75, RBI, 2022)
Remunerative price is the most important factor for farmers. Among other demands, the farmers
who are agitating want (a) MSP at C2cost +50% (Swaminathan report) and (b) legalising MSP
for 23 crops. Farmers’ income growth declined from 3.4% during 2004-05 to 2011-12 to 2.45%
during 2011-12 to 2018-19. Agricultural prices are volatile. In this context, some of the demands
may be justified regarding incomes. But, legalizing MSP for all crops may have a problem.
Deficiency payments system may be better from cost point of view.
Basically, we have to change the narrative on agriculture towards more diversified high value
production, better remunerative prices and farm incomes, marketing and trade reforms, high
productivity with less inputs, cost effective, less chemical and pesticide based, inclusive in terms
of women and youth farmers, small farmers and rain fed areas, nutrition sensitive,
environmental friendly and sustainable agriculture. Government policies like price and water
policies tend to focus on rice and wheat. Three crops rice, wheat, sugarcane corner 75 to 80% of
irrigated water in the country. Rice and wheat cultivation in Punjab and Haryana is not
sustainable because of ground water depletion. There is a need to promote millets, pulses and
oilseeds, horticulture etc. for more equal distribution of water across the country. Focus should
be more on small and marginal farmers, women farmers, rainfed areas in different states.
16
3.2. Achieving Zero Hunger
Inspite of increase in per capita foodgrains and transformation of agriculture, hunger and
malnutrition are quite high in India9. The SDG 2.1 deals with ending hunger and ensure access
by all people, in particular the poor and people in vulnerable situations, including infants, to
safe, nutritious and sufficient food all year round by 2030 while SDG 2.2 goal is to end all forms
of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and
wasting in children under 5 years of age, and address the nutritional needs of adolescent girls,
pregnant and lactating women and older persons. FAO (2023) says ‘Nutrition is mentioned
specifically in SDG 2 but is central to the achievement of all 17 SDGs’.
According to Swaminathan (2015), hunger has three major dimensions. First one is calories
deprivation. Second, protein hunger is another deprivation, due to inadequate consumption of
pulses, milk, eggs, fish and meat. Third is hidden hunger, caused by the deficiency of micro-
nutrients such as iron, iodine, zinc, vitamin A and vitamin B12. Food and agricultural
Organisation (FAO) defines food security as ensuring ‘that all people, at all times, have
physical, social, and economic access to sufficient, safe, and nutritious food that meets their
food preferences and dietary needs for an active and healthy life’ (FAO, 1996).
India achieved significant progress in achieving food and nutrition security. But, there are
several challenges. The National Family Health Survey (NFHS) data shows some reduction in
child stunting from 48% in 2005-06 to 35.5% in 2019-21 and underweight from 42.5% to
32.1%. But wasting has not declined over time. Women having body mass index (BMI) below
normal declined from 35.5% in 2005-06 to 18.7% in 2019-21.
There are five challenges on achieving zero hunger in India as given below.
(1)According to FAO, still 16% of population (234 million ) suffer from undernourishment
(2) Inspite of decline, 35% of Indian children suffer from stunting
(3) All women age 15-49 years who are anemic was 57% in 2019-21 – increased from 53.1% in
2015-16
(4) FAO (2023) indicates around 75% of Indian population can’t afford the healthy diet, which
costs $3.066 (in ppp) per capita per day in 2021 – Around 104.3 crore population
(5) At the same time, obesity is increasing
EAT-Lancet Commission (2019) recommended healthy and sustainable diet is not affordable
for the majority of the population in India. A recent study of the Tata-Cornell Institute For
Agriculture and Nutrition (Gupta et al, 2021) shows that the cost of the EAT-Lancet dietary
recommendations for rural India ranges between $3 and $5 per person per day. In contrast,
actual dietary intake at present is valued at around $1 per person per day (Table 11). Gupta et al
(2021) shows the actual diet for their sample is only $0.62 while for CPHS (Consumer Pyramid
Household Survey) at the all India level is $1.74. The cost of actual diets for three states of
Bihar, U.P. and Odisha are lower than that of all India.

9 On achieving zero hunger, see Dev et al (2024). On agricultural productivity
and incomes, see Krishna and Meenakshi (2022)

17
The gap is much more for meat, fish, poultry, dairy and fruits. In fact, even in rural areas,
processed foods like potato chips and biscuits are cheaper and available as compared to fruits
and vegetables. Even if they are available, these items are expensive for common people.
If the same above trend continues on affordability and nutrition indicators, it would be difficult
for India to achieve SDG goals on hunger and nutrition.
Table 11: Cost of Diets (US$ per person per day 2019 ppp)
EAT –Lancet diet (minimum) $3.33
EAT –Lancet diet (average) $5.32
Actual diet (minimum) based on sample $0.62
Actual diet (average) based on sample $1.00
Population level diets from CPHS
All India $1.74
Bihar $1.45
Uttar Pradesh $1.38
Odisha $1.30
Source: Gupta et al (2021)
Undernutrition
There are significant variations in undernutrition across states. In 5 states (Gujarat, Himachal
Pradesh, Kerala, Telangana, West Bengal stunting has increased during the period 2015-16 to
2019-21 (Table 12). It marginally increased in Gujarat and Maharashtra. Stunting declined in 9
states. Kerala state has the lowest stunting level at 23.4% followed by Punjab, Tamil Nadu and
Uttarakhand. On the other hand, Bihar, Jharkhand, Uttar Pradesh and Gujarat have 39% or
higher levels of Stunting. Similar variations can be seen in wasting.
Table 12: Undernutrition among children under 5 years: 2015-16 and 2019-21
States Stunting (height for age) Wasting (weight for height)
2015-16 2019-21 2015-16 2019-21
Andhra Pradesh 31.4 31.2 17.2 16.1
Assam 36.4 35.3 17.0 21.7
Bihar 48.3 42.9 20.8 22.9
Chattisgarh 37.6 34.6 23.1 18.9
Gujarat 38.5 39.0 26.4 25.1
Haryana 34.0 27.5 21.2 11.5
Himachal Pradesh 26.3 30.8 13.7 17.4
Jharkhand 45.3 39.6 29.0 22.0
Karnataka 36.2 35.4 26.1 19.5
Kerala 19.7 23.4 15.7 15.8
Madhya Pradesh 42.0 35.7 25.8 19.0
Maharashtra 34.4 35.2 25.6 25.6
Odisha 34.1 31.0 20.4 18.1
Punjab 25.7 24.5 15.6 10.6
Rajasthan 39.1 31.8 23.0 16.8
Tamil Nadu 27.1 25.0 19.7 14.6
Telangana 28.0 33.1 18.1 21.7
Uttarakhand 33.5 27.0 19.5 13.2
Uttar Pradesh 46.3 39.7 17.9 17.3
West Bengal 32.5 33.8 20.3 20.3
All India 38.4 35.5 21.0 19.3
Source: NFHS-5
18
A study by Gulati and Jose (2023) examined the determinants of malnutrition using unit level
household data. It shows, mother’s education, mother’s BMI, improved toilets, breast feeding,
folic acid supplements, institutional deliveries reduce stunting significantly.
3.3. Poverty
Poverty alleviation has been on the national policy agenda even before independence. As early
as 1938, the Indian National Congress constituted a National Panning Committee (NPC) headed
by Jawaharlal Nehru, which had declared that the social objective should be to ensure an
adequate standard of living for the masses, in other words, to get rid of the appalling poverty of
the people’. The importance of reduction in poverty and provision of other basic needs have
been emphasized in all the five-year plans since independence.
There are two conclusions on the trends in poverty since 1951. First one is that a World Bank
study by Datt et al (2016) shows that poverty declined by 1.36 percentage points per annum in
post-1991 compared to that of 0.44 percentage points per annum prior to 1991. Their study
shows that among other things, urban growth is the most important contributor to the rapid
reduction in poverty even in rural areas in post-1991 period.
Second one is that within the post-reform period, poverty declined faster during 2004-2012 as
compared to 1993-2005 period. Poverty declined only 0.74 percentage points per annum during
the period 1993-94 to 2004-05. But, poverty declined by 2.2 percentage points per annum during
the period 2004-05 to 2011-12. It is the fastest decline of poverty compared to earlier periods10.
We do not have official data on consumer expenditure after 2011-12. In the last two years, there
have been several studies on poverty using indirect methods and using CMIE (Centre for
Monitoring Indian Economy), and PLFS (Periodic Labour Force Surveys) data sources. There
have been extreme views on poverty trends in the post 2011-12 period. Using the ‘leaked’ data
for 2017-18. Subramaniam (2019) shows poverty increased during 2011-12 and 2017-18. Bhalla
et al (2022) present estimates of poverty and inequality for the period 2004-05 to 2020-21.
According to them, the extreme poverty (ppp $ 1.9) was as low as 0.8 per cent in the pre-
pandemic year 2019.11
Recently MOSPI (Ministry of Statistics and Policy Implementation) released a report on

Household Consumption Expenditure Survey for the year 2022-23. There have been significant
changes in consumption patterns between 2011-12 and 2022-23. In rural areas, the share of
cereals in total expenditure declined from 22.2% in 2011-12 to 4.9% in 2022-23 while the share
of food declined from 59.4% to 46.4%. The share of conveyance rose from 2.9% to 3.6% while
the share of durables increased from 2.6% to 6.9%. In the case of urban areas, the share of
cereals in total expenditure declined from 12.4% to 3.6% while the share of food declined from
48% to 39.2%. The share of conveyance in urban areas rose from 5.5% to 8.5% while the share
of durables increased from 3.6% to 7.2%. The share of rent in urban areas has risen from 4.5%
to 6.6%.
The Multidimensional Poverty Index 2023 report of the United Nations Development
Programme (UNDP) and Oxford Poverty and Human Development initiative (OPHI) show that
415 million Indians were lifted out of poverty in 15 years during the period 2005-06 to 2019-21.

10 On urban poverty, see Hashim (2017)
11 Also see Roy et al (2022), Dreze and Somanchi (2023) on poverty estimates.
19
The incidence of multidimensional poverty index declined from 55.1 per cent in 2005-06 to 27.5
per cent in 2015-16 and to 16.2 per cent in 2019-21. But, the report says that India still has 230.1
poor population in 2019-21.
A recent report of NITI Ayog on multidimensional poverty shows that the percentage of poor
has gone down from 25 per cent in 2015-16 to 15 per cent in 2019-21 and around 135 million
people were lifted out of poverty during this period.
The state level poverty ratios show that Kerala has the lowest ratio at 0.6% followed by Tamil
Nadu (2.20%), Pubjab (4.75%), Himachal Pradesh (4.93%) and Telangana (5.88%) (Table 13).
Bihar has the highest poverty ratio (33.76%) followed by Jharkhand (28.81), Uttar Pradesh
(22.93), Assam (19.35%) and Madhya Pradesh (20.63). But, Bihar has the highest rate of
poverty reduction from 57.9% in 20015-16 to 33.76% in 2019-21 – a reduction of 18.3
percentage points.
Table 13. Multi Dimensional Poverty Ratio at State level

States Multidimensional Rank States Multidimensional Rank
Poverty ratio Poverty ratio
2019-21 (%) 2019-21 (%)
Kerala 0.55 1 West Bengal 11.89 12
Tamil Nadu 2.20 2 Rajasthan 15.31 13
Punjab 4.75 3 Odisha 15.68 14
Himachal Pradesh 4.93 4 Chattisgarh 16.37 15
Telangana 5.88 5 Madhya Pradesh 20.63 16
Andhra Pradesh 6.06 6 Assam 19.35 17
Haryana 7.07 7 Uttar Pradesh 22.93 18
Karnataka 7.58 8 Jharkhand 28.81 19
Maharashtra 7.82 9 Bihar 33.76 20
Uttarakhand 9.67 10
Gujarat 11.66 11 All India 14.96 --
Source: Niti Ayog (2023)
3.4. Inequalities
The approach of growth with equity has been followed since independence. However, focus has
been more on absolute poverty than inequality. The inequalities are high in India particularly in
wealth and income. According to Oxfam (2023), the top 10% of the Indian population holds
77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%,
while 670 million Indians who comprise the poorest half of the population saw only a 1%
increase in their wealth.
3.4. 1. Regional Inequalities in Income and Wealth
The consumption and income data are available only up to 2011-12. Income inequalities as
shown by the Gini Coefficient are high in all the major states of India with significant regional
disparities in levels and trends (Tables 14 and Fig. 7). Income inequality is the highest in Gujarat
(0.61) followed by Chattisgarh (0.60), West Bengal (0.57), Haryana (0.57) and Madhya Pradesh
(0.56) in 2011-12 (Table 11, Fig 7). It is the lowest in Jammu&Kashmir (0.46) followed by
Tamil Nadu (0.47), Kerala (0.47). Income inequality increased significantly between 2004-05
and 2011-12 in Chattisgarh, West Bengal, Himachal Pradesh and Punjab. On the other hand, it
declined in Southern states (Kerala, Tamil Nadu, Karnataka) and Jammu& Kashmir.
20
Inequality in wealth is very high across all the major states ranging from a Gini coefficient of
0.80 in Maharashtra to 0.55 in Jammu&Kashmir in 2012 (Table 15, Fig 8). Apart from
Maharashtra, wealth inequality is high in Punjab, West Bengal, Madhya Pradesh and Tamil
Nadu. In contrast to income inequality, Southern states (Tamil Nadu, Andhra Pradesh,
Karnataka and Kerala) showed high wealth inequality. Again, unlike income inequality, wealth
inequality increased significantly in almost all the states between 2002 and 2012.
Table 14: Income Inequality (Rural+Urban) based on India Human Development Survey: 2004-05 and
2011-12
States Gini Gini Rank States Gini Gini Rank
2004-05 2011-12 2004-05 2011-12
Gujarat 0.606 0.606 1 Orissa 0.535 0.520 12
Chattisgarh 0.469 0.604 2 Jharkhand 0.532 0.513 13
West Bengal 0.522 0.567 3 Andhra Pradesh 0.517 0.512 14
Haryana 0.511 0.565 4 Assam 0.521 0.508 15
Madhya 0.549 0.556 5 Uttarakhand 0.473 0.493 16
Pradesh
Karnataka 0.591 0.541 6 Maharashtra 0.504 0.476 17
Himachal 0.476 0.533 7 Kerala 0.568 0.473 18
Pradesh
Punjab 0.483 0.530 8 Tamil Nadu 0.501 0.472 19
Uttar Pradesh 0.546 0.526 9 Jammu&Kashmir 0.511 0.462 20
Bihar 0.509 0.521 10 All India 0.548 0.553
Rajasthan 0.499 0.521 11
Source: Estimated from the data of India Human Development Surveys 2004-05 and 2011-1212.
Fig 7. Income Inequality Across States
Income Inequality (Rural+Urban) based on

India Human Development Survey: Gini
Coeﬃcient, 2004-‐05 and 2011-‐12
0.8
0.6
0.4
0.2 Gini 2004-‐05
0
Gujarat
ChaPsgarh
Haryana
Madhya
All India
Karnataka
Himachal
Punjab
Rajasthan
Orissa
Jharkhand
Andhra
Assam
Kerala
Tamil Nadu
Bihar
UWar
Gini 2011-‐12
UWarakhan
Jammu&Kas
Maharashtr
Source: IHDS

12 Estimates sent to me by Kartikeya Naraparaju, Faculty, IIM, Indore
21
Table 15: Wealth Inequality (Rural+Urban)

States Gini Gini Rank States Gini Gini Rank
2002 2012 2002 2012
Maharashtra 0.68 0.80 1 Kerala 0.63 0.64 12
Punjab 0.68 0.75 2 Uttarakhand 0.60 0.64 13
West Bengal 0.64 0.75 3 Chattisgarh 0.61 0.64 14
Madhya Pr 0.60 0.74 4 Uttar Pradesh 0.59 0.63 15
Tamil Nadu 0.71 0.74 5 Rajasthan 0.55 0.63 16
Andhra Pradesh 0.72 0.72 6 Himachal Pradesh 0.54 0.62 17
Haryana 0.68 0.71 7 Jharkhand 0.55 0.61 18
Assam 0.52 0.69 8 Odisha 0.61 0.60 19
Gujarat 0.65 0.69 9 Jammu&Kashmir 0.52 0.55 20
Bihar 0.60 0.67 10 All India 0.66 0.74 --
Karnataka 0.65 0.67 11
Source: Anand and Thanpi (2016
Fig 8. Wealth Inequality Across States
Wealth Inequality (Rural+Urban), Gini

Coeﬃcient
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2 Gini 2002
0.1
0
Gini 2012
Maharashtra
West Bengal
Madhya
All India
Andhra Pradesh
Haryana
Karnataka
Kerala
UWarakhand
Rajasthan
Himachal
Jharkhand
Odisha
Assam
Gujarat
Tamil Nadu
UWar Pradesh
Punjab
ChaPsgarh
Bihar
Jammu&Kashmi
Source: Based on data in Anand and Thampi (2016)
Table 16 provides Gini coefficients for income, wealth and consumption in high and
low income states. It shows that inequality is high or low in both the category of
states. The inequality differs with regard to the measure viz., income, wealth and
consumption used. Gujarat has high inequality in income and wealth but has relatively
lower consumption inequality. Here income inequality is 30 points high than for
consumption. In the case of Kerala and Maharashtra, wealth inequality is much higher
than income and consumption inequality. In Bihar, consumption inequality is much
lower than income and wealth inequality.
Table 16. Inequaity for High and Low Income States: Rural+Urban, Gini Coefficient, 2011-12,
States Income Wealth Consumption
Gujarat O.61 0.65 0.31
Kerala 0.47 0.64 0.38
Mahashtra 0.48 0.80 0.37
Bihar 0.51 0.67 0.23

Chattisgarh 0.60 0.64 0.33
Jharkhand 0.51 0.61 0.30
Source: Same as table 15.
22
The annual growth rate of per capita assets show that rich and middle income states
(like Maharashtra, Haryana and Kerala) have high growth while low income states
such as Bihar and Odisha have not improved their per capita assets as rapidly (Anand
and Thampi, 2016).
3.5. Regional Disparities in Human Development
Ommen and Chakravartti (2023) find both β- and σ- convergence for the Human Development
Index (HDI) at state level over the period 1991 to 2018. Non-income indices like health and
education played a major role in convergence. This study also indicates that speed of
convergence during the post-fiscal reform regime since 2005. However, as shown in table 17,
the ranks in HDI have not changed much between 2001 and 2008. In other words, although the
states are converging in HDI over time, the gap between the levels of HDI of low and high
performing states has not been reduced significantly.
Table 17: Human Development Index: 2001 and 2018
States Human development Index Values Ranks
2001 2018 2001 2018
Kerala 0.135 0.227 1 1
Maharashtra 0.094 0.189 2 3
Tamil Nadu 0.082 0.190 3 2
Punjab 0.080 0.180 4 4
Karnataka 0.074 0.168 5 6
Gujarat 0.070 0.165 6 7
Haryana 0.069 0.172 7 5
West Bengal 0.066 0.149 8 8
Andhra Pradesh 0.056 0.137 9 9
Rajasthan 0.049 0.127 10 11
Assam 0.047 0.121 11 12
Madhya Pradesh 0.039 0.104 12 13
Odisha 0.039 0.128 13 10
Uttar Pradesh 0.031 0.097 14 14
Bihar 0.027 0.092 15 15
All India -- 0.139 -- --
Source: Ommen and Chakravartti (2023)
Niti Aayog has been bringing out reports on SDG index since 2018. The report on SDG index
for 2020-21 shows that top five states are Kerala, Himachal Pradesh, Tamil Nadu, Andhra
Pradesh and Karnataka while bottom five states are Rajasthan, Uttar Pradesh, Assam, Jharkhand
and Bihar (Table 18). It is a long way to go for bottom states to achieve many of the SDG goals.
Table 18: Niti Aayog SDG Index: 2020-21
States SDG Index Rank States SDG Index Rank
Kerala 75 1 Madhya 62 12
Pradesh
Himachal 74 2 West Bengal 62 13
Pradesh
Tamil Nadu 74 3 Chhattisgarh 61 14
Andhra Pradesh 72 4 Odisha 61 15
Karnataka 72 5 Rajasthan 60 16
Uttarakhand 72 6 Uttar Pradesh 60 17
Maharashtra 70 7 Assam 57 18
Gujarat 69 8 Jharkhand 56 19
23
Telangana 69 9 Bihar 52 20
Punjab 68 10 All India 66 --
Haryana 67 11
Source: Niti Aayog, 2022
Using state level data, Kakwani and Zakaria (2023) examine whether growth and development
in India have been pro-poor and inclusive over two decades. Two major conclusions of the study
are the following:
(a) Using per capita real state net domestic product across states, the study concludes that the
growth patterns indicate India's economic growth has not been pro-poor or inclusive. India
has achieved high and sustained growth in the two decades, generating total prosperity, but
this prosperity is not shared equally by all states.
(b) In the second exercise, the study uses state level well being indicators like infant survival
rate, literacy rate, percentage of children not stunted, percentage of children not wasted and
life expectancy at birth. The results show that development has been generally pro-poor,
implying that the poorer states have achieved relatively and absolutely higher performance
in well-being13.
However, second conclusion based on well being indicators has limitations. As Kakwani and
Zakaria (2023) say that unlike income indicators, well-being indicators have asymptotic limits,
reflecting physical and biological maxima. For example, the average life expectancy at birth has
a maximum limit of not more than 85 years because people cannot live forever. As the standard
of living or well-being reaches progressively higher levels, it becomes increasingly difficult to
achieve the same degree of improvement further. For instance, it is easier to the life expectancy
at birth from 60 to 65 years than from 80-85 years. Thus, at a higher level of well-being.
Therefore, income measure may be much better for examining inequalities or pro-poor growth.
3.6. Policies for Reducing Inequalities

Policies that reduce inequalities are discussed below. Many of these policies can also raise
growth and reduce poverty. Expanding productive employment is central for reducing
inequalities and poverty. It is also known that a high output elasticity of employment generally
ensures that growth is egalitarian. This is also crucial for the success of Sustain Development
Goals (SDGs).
Structural change in Employment
The historical experience of different countries shows that structural transformation from low-
productive to high-productive sectors led to higher economic growth and the creation of greater
productive employment. Economists like Lewis (1954), Kaldor (1966) and Kuznets (1966,
1971) emphasised the relationship between structural transformation and economic growth. This
is reflected in the economy transforming from agriculture to industry and services in terms of
changes in the composition of output and employment. The literature on structural
transformation is derived mostly from stylized facts than from economic theorising (Nayyar,
2019). We look at the structural change in employment.

13 Also see Mundle 2022
24
(a) The share of agriculture in employment declined from 73.9% in 1972-73 to 45.8% in 2022-23–
a decline of 28 percentage points over five decades (Table 19). This is a substantial decline
although it is still high.
Table 19. Structural Change: Share in Employment (per cent)

1972- 1993- 2004- 2011- 2019- 2022-
73 94 05 12 20 23
Agriculture and allied activities 73.9 64.8 58.5 48.9 45.6 45.8
Manufacturing 8.9 10.5 11.7 12.8 11.2 11.4
Construction 1.8 3.1 5.6 10.6 11.6 13.0
Industry (Secondary sector) 11.3 14.7 18.1 24.4 23.7 25.2
Trade, hotels and restaurants 5.1 7.4 10.2 11.4 13.2 12.1
Transport, storage and 1.8 2.8 3.8 4.4 5.6 5.4
communications
Financing, real estate, business 0.5 0.9 1.5 2.6 3.1 2.7
services
Community, social and personal 7.4 9.4 7.7 8.2 8.9 8.8
services
Services (Tertiary sector) 14.8 20.5 23.4 26.7 30.7 29.0
Non-agriculture 26.1 35.2 41.5 51.1 54.4 54.2
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: IHD (2014) for the period 1972-73 to 2011-12; PLFS for 2019-20 and 2022-23
(b) The share of the industry rose from 11per cent to 25 per cent in five decades. This increase was
mainly due to an increase in the share of construction. The share of manufacturing increased
initially from 8.9per cent in 1972-73 to 10.5per cent in 1993-94. Subsequently, it was between
11.2per cent to 12.8per cent during 1993-94 to 2022-23. It shows that there was hardly any
increase in the share of manufacturing in employment in the last three decades. The share of
construction in employment was 2 percentage points higher than that of manufacturing in 2022-
23 (Table 19).
(c) In contrast to the share of manufacturing, the share of services in employment increased
significantly from 14.8per cent in 1972-73 to 29.0 per cent in 2022-23 – an increase of 14
percentage points over 50 years. Within services, the share of trade, hotels and restaurants rose
faster than other services. Their share increased from 5per cent in 1972-73 to 12per cent in
2022-23 – an increase of 7 percentage points. These jobs are mostly in the informal sector.
Similarly, the share of transport and communications rose from 1.8per cent to 5.4per cent during
the same period. The high-value financing, real estate and business services absorbed only
around 2.7per cent of the workforce in 2022-23.
(d) Structural transformation in terms of employment shows that the decline in agriculture is
absorbed by construction and services in the informal sector like trade, hotels, and restaurants.
The share of the non-farm sector in rural areas has increased over time.
The structural transformation at state level for 2022-23 shows significant regional disparities.
The share of agriculture in total employment is less than 30% while it is more than 50% in Uttar
Pradesh, Rajasthan, Himachal Pradesh and Madhya Pradesh (Table 20). There are significant
disparities in North Eastern states. The share of agriculture in Tripura is 36% while it is 62% in
Arunachal Pradesh.
25
Table 20. Structural Transformation Across States in Employment: Shares of Agriculture and Non-agriculture,
2022-23
States Share of Share of Non-
Rank States Share of Share of Non- Rank
Agriculture agriculture Agricultureagriculture
(%) (%) (%) (%)
Punjab 24.6 75.4 1 Rajasthan 54.8 45.2 16
Kerala 27.3 72.7 2 Himachal 58.4 41.6 17
Pradesh
Tamil Nadu 28.9 71.1 3 Madhya 59.8 40.2 18
Pradesh
West 34.2 65.8 4 Chattisgarh 62.6 37.4 19
Bengal
Haryana 29.8 70.2 5 India 45.8 54.2 --
Gujarat 41.8 58.2 6 North Eastern
States including
Sikkim
Andhra 44.5 55.5 7 Tripura 35.6 64.4 1
Pradesh
Karnataka 45.6 54.4 8 Manipur 35.7 64.3 2
Maharash 46 54 9 Mizoram 43.1 56.9 3
Tra
Telangana 47.3 52.7 10 Sikkim 45.8 54.2 4
Uttarakh 47.4 52.6 11 Meghalaya 47.0 53.0 5
And
Odisha 48.1 51.9 12 Assam 48.8 51.2 6
Jharkhand 49.3 50.7 13 Nagaland 50.0 50.0 7
Bihar 49.6 50.4 14 Arunachal 62.1 37.9 8
Pradesh
Uttar 54.3 45.7 15
Pradesh
Source: PLFS 2022-23
Basole (2022) shows that India pulled workers out of agriculture but not from informal sector.
The structural change is from agriculture to construction and informal services14.
Women’s Work Participation Rates

The participation rates of women are low and declined in India before rising in recent years.
Work participation rate (WPR) for women declined from 41.6 per cent in 2004-05 to 22per cent
in 2017-18 before rising significantly to 35.9 per cent in 2022-23. It shows an ‘U’ shaped trend
over time (Fig. 9). The difference in the WPR between men and women increased from 41
percentage points in 2004-05 to 49 percentage points in 2017-18 before declining to 40
percentage points in 2022-23. In fact in urban areas, only 22 per cent of women participated in
work compared to 70.4 per cent of men in 2022-23 – a difference of 48 percentage points. It is
true that the participation rates for women increased from 22% in 2017-18 to 36% in 2022-23.
The increase in WPR for women since 2019-20 should be interpreted with caution as low
quality employment can increase during periods of distress. Before Covid, 51% of women were
self-employed in 2017-18. After Covid this rose to 65% 2022-23. As a result earnings from self-
employment declined in real terms over this period. Even two years after the 2020 lockdown,
self-employment earnings were only 85% of what they were in the April-June 2019 quarter
(State of working India, 2023)

14 On structural transformation, see Chand (2021), Chand and Singh (2023), Dev
(2023), Ghosh (2020), Golder (2023), Rajan and Lamba (2023), Ramaswamy
(2019)
26
Fig.9. Female work participation rates as per Usual Status (ps+ss), 15 years and above
60
50
40
Per cent
30
20
10
0
2004-‐05 2009-‐10 2011-‐12 2017-‐18 2018-‐19 2019-‐20 2020-‐21 2021-‐22 2022-‐23
Rural Urban Rural + Urban
Notes: ps =Principal status; ss: subsidiary status

Source: PLFS
The state level data reveal significant regional variations across states. The work particion rates
for States like Himachal Pradesh, Chattisgarh, Rajasthan, Jharkhand, Andhra Pradesh and
Madhya Pradesh were more than 50% while Punjab, Bihar, Haryana have less 30% in 2022-23
(Table 21). Among North Eastern states, work participation rates for women for Nagaland was
63% while it was 20% for Assam.
Table 21. Female Work Participation Rates: Above 15 years (%), 2022-23
States Rural Urban Rural+Urban Rank
(rural+urban)
Himachal Pradesh 72.0 28.5 67.6 1
Chattisgarh 65.8 30.9 58.6 2
Rajasthan 54.8 20.9 46.5 3
Jharkhand 52.3 15.7 45.5 4
Andhra Pradesh 50.2 29.9 44.0 5
Madhya Pradesh 52.0 20.6 43.8 6
Odisha 46.5 25.9 43.6 7
Telangana 53.7 24.9 43.1 8
Gujarat 54.2 25.5 41.7 9
Maharashtra 49.8 25.9 39.8 10
Tamil Nadu 47.5 26.8 38.6 11
Karnataka 42.0 28.8 37.2 12
Uttarakhand 44.1 15.1 37.0 13
Kerala 37.0 29.3 33.5 14
West Bengal 36.2 26.1 33.1 15
Uttar Pradesh 35.2 12.6 30.6 16
Punjab 26.3 23.2 25.2 17
Bihar 23.0 11.4 22.0 18
27
Haryana 20.5 18.2 19.7 19

All India 40.7 18.7 35.9 -
North Eastern
States including
Sikkim
Sikkim 74.1 33.0 66.4 1
Nagaland 69.6 45.8 62.9 2
Arunachal 60.8 31.1 56.0 3
Pradesh
Meghalaya 61.6 33.1 56.0 4
Mizoram 47.3 40.0 43.8 5
Tripura 36.6 26.8 34.8 6
Manipur 28.7 33.0 29.9 7
Assam 19.3 25.3 19.6 8
Source: PLFS, 2022-23
Youth Unemployment: The unemployment among youth is generally three times higher than
that of total unemployment. The State of Working India (2023) shows that the unemployment is
concentrated among the educated youth. It is it above 15 percent for all graduates. But, the
unemployment is 42 percent for young graduates (Table 22). There is large variation in the rate
of unemployment even within the higher educated group across age. The unemployment rate
falls from over 40 percent for educated youth under 25 years of age to less than 5 percent for
graduates who are 35 years and above.
Table 22: Unemployment is concentrated among educated youth (%)

Less 25-29 years 30-34 years 35-39 years 40 years
than 25 and above
years
Graduate &above 42.3 22.8 9.8 4.5 1.6
Higher Secondary 21.4 10.6 5.0 3.1 2.1
Secondary 18.1 7.5 4.6 2.4 1.7
Primary or middle 15.0 5.4 3.0 2.4 2.2
Literate but below primary 10.6 3.3 1.5 2.4 2.2
Illiterate 13.5 4.3 4.0 3.4 2.4
Source: State of Working India, 2023
Sharma (2022) showed that youth work participation rates (WPR) and level of education shows
the ‘U’ shaped relationship. Illiterates and technical graduates have high WPRs compared to that
of youth with secondary/higher secondary education. The youth with education and skills will
have higher unemployment as they can remain unemployed and search for suitable jobs. One of
the main problems for the agitations on reservations by the people like the Marathas in
Maharashtra, Patidars in Gujarat, Jats in Haryana and Kapus in Andhra Pradesh relates to youth
unemployment and aspirations of these castes to move to quality employment. Central and State
governments have to be sensitive to youth employment problem.
High share of informal sector: India has one of the highest number and proportion of informal
workers in the world15. Around 91 per cent (422 million) of the total were informal workers in

15 On informal sector, see Marjit (2009)
28
2017-18. In other words, only 9% of the total workers in India are formally employed and enjoy
regular jobs. It is interesting to note that out of 80 million organized sector workers, 51% were
informal workers in 2017-18. It shows that even in organized sector, the contractual
employment has been increasing faster.
The percentage of workers in proprietary and partnership enterprises among workers in non-
agricultural sectors show an increase from 68.2% in 2017-18 to 74.3% in 2022-23 (Tabl 23) and
Fig 4). In order to reduce inequalities in income and wage gaps, policies have to focus on
improving productivity of informal sector and providing decent jobs.
Table 23 Informal enterpises: Percentage of workers engaged in proprietary and partnership enterprises among
workers in non-agricultural sector
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Persons 68.2 68.4 69.5 71.4 71.8 74.3
(Male+Female)
Source: PLFS
Fig 4. Informal Enterprises: Percentage of workers (Male+Female) engaged in proprietary and

partnership enterprises among workers in non-agricultural sector
75
74
73
72
71
70
69
68
67
66
65
2017-‐18 2018-‐19 2019-‐20 2020-‐21 2021-‐22 2022-‐23
Source: PLFS
Social protection for Gig-workers: A new type of informal workers is a platform worker.
With an estimated eight million people employed in the industry ‘gig work’ has become a
major source of jobs in India and other countries. There are issues on their incomes, work
conditions, work status, social security, and health insurance, among other things.
NCAER (National Council of applied Economic Research) has recently released a report on
platform workers (NCAER,2023). The study says that 61.9 per cent of the workers received
rations. Only 12.2% had Ayushman Bharat card and 11.1% had State health insurance. Around
7.1% have registered e-Sharam portal and 4% had Atal Pension Yojna. Rajasthan government is
probably the first state to introduce the Rajasthan Platform -Based Gig Workers (Registration
and Welfare) Bill, 2023 with the aim of ensuring social security for gig workers. The
specificities of the policies and how they might benefit the workers are still unclear. Providing
29
social security for gig workers needs attention. Similarly, internal migrants also face several
problems in Indian cities as shown by the experience of these workers during the lockdown
period of Covid-19.
MSMEs : Micro, small and medium enterprises as a whole form a major chunk of
manufacturing in India and play an important role in providing large employment and exports.
The policies have to give a positive bias towards MSMEs so that they can be a driver for
employment generation. Short and long-term initiatives are required specifically for the
development of MSMEs.
Automation and technology: India has to be ready to approach a fourth industrial revolution. It
may lead to some disruption in the established sectors and may lead to some pressures on
employment. Although presently robotics and other technological problems are more in
developed countries, India should be ready for facing the impact of robotics, artificial
intelligence (AI) and machine learning on employment. Optimists say that net employment may
rise with fourth industrial revolution including robotics. For example, Microsoft CEO Satya
Nadella says that artificial intelligence can be made more inclusive and inequalities can be
reduced.
3.6.. Some other issues and policies for reducing inequality
(a) Social Protection: India has long experience in social protection programmes like
MGNREGA, National Rural Livelihoods Mission (NRLM), public distribution system (PDS),
nutrition programmes like mid-day meal schemes, ICDS, etc. In the last few years, the
government has done well in providing universal access to cooking gas or liquified petroleum
gas (LPG) connections under the Pradhan Mantri Ujjwala Yojana), and electricity through the
Pradhan Mantri Sahaj Bijli Har Ghar Yojana, and/or universal cleanliness programmes like the
Swachh Bharat Abhiyan, and inclusive financial programmes like the Pradhan Mantri Jan Dhan
Yojana and the MUDRA.
There are some gaps in the social protection programmes. Some of the poor are excluded due to
Adhaar enabled services. This problem has to be tackled. The social protection programmes
have to be strengthened with more allocations. In India there has been a lot of discussion on
Universal basic income (UBI). There is a consensus for cash transfers directly giving to farmers,
women, old age population etc, a kind of Quasi UBI. It is true that a universal scheme is easy to
implement. The issue with targeted programmes is the problem of identification and exclusion.
In order to avoid the identification problem (Rangarajan and Dev, 2021) suggested three
proposals to meet the objective of providing minimum basic income to poor and vulnerable
groups in both rural and urban areas. These are:
(a) first, give cash transfer to all women in both rural and urban areas above the age of 20
years;
(b) second, expand the number of days provided under National Rural Employment
Programme from 100 to 150 in rural areas.
(c) third launch National Employment Guarantee Scheme in urban areas including skill
improvement.
In all these proposals, there is no problem of identification. A combination of cash transfer and
an expanded employment guarantee scheme can provide minimum basic income.
30
(b) More investment in less developed states: As shown above, inequalities in income across
states is quite high. Investments in physical and human capital in less developed states are
needed. Apart from other factors, bifurcation of large states into smaller states may also lead to
better development (Rao, 2010; Dholakia, 2023).
According to Rao (2022), the major areas of concern for inclusive development are the
following: (a) Interstate (regional) disparities in development; (b) Rural–urban disparities in
income; (c) Inadequate public expenditure on education and healthcare; (d) Slow pace of social
inclusion of marginalised sections; (e) Slow pace of empowerment of women; (f) Inadequate
access to institutional credit for weaker sections; (g) Slow rise in tax revenues; and (h) Slow
pace of decentralising development.
4. CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT
Brundtland Commission 1987 defines sustainability as “ development that meets the needs of
the present without compromising the ability of futute generations to meet their own needs”
(World Commission on Environment and Development, 1987) We have to look at issues such
as energy, environment, natural resources and climate change.
Dr. M.S. Swaminathan appealed to the farmers as early as 1968 not to harm the long term
production potential for short term gain. He described this appeal in his own words as follows.“
In order to ensure that a productivity based agriculture does not result in ecological harm due to
unsustainable exploitation of land and water, adoption of mono culture and excessive use of
mineral fertilisers and chemical pesticides, I appealed to farmers in January 1968 not to harm the
long term production potential for short term gains. I pleaded for converting the green revolution
into evergreen revolution by mainstreaming the principles of ecology in technology
development and dissemination. I defined evergreen revolution as increasing productivity in
perpetuity without associated ecological harm. I pleaded for avoiding the temptation to convert
the green revolution into a greed revolution. Unfortunately, ecologically unsound public
policies, like the supply of free electricity, have led to the over-exploitation of the acqifer in
Punjab, Hayana and Western UP region. The heartland of the green revolution is in deep
ecological distress …The need for adopting the methods of an evergreen revolution has
therefore become very urgent” (p.20, Swaminathan, 2010)16.
Land, water, energy, common property resources and forests are some of natural resources that
needs to be sustained over time. Fiscal and environmental implications of subsidy policies in
energy, water and agricultue sectors are being recognised. It is known that most of these
subsidies pose a threat to environment. Soil is under threat in India from soil erosion due to
deforestation and use of chemical fertilisers. Free or cheap power has encouraged excess drawal
of groundwater leading to falling water tables in large parts of the country.
4.1.Impact of Climate Change in India’s States
Several studies have examined the impact of rising temperature on States of India. Sandhani et
al (2020) examines climate change impact on economic growth in India. Using state and district
level data on climate variables and growth rate of per capita real GDP, this study evaluates the
short- as well as medium-run effects of climate change on growth. The results based on state-
level analysis show negative effects of rising temperature on growth during 1980-2019. These

16 This quotation was also given by Jeffrey Sachs in his foreword to the book
31
state level results are further reinforced by the results from district-level analysis. First, higher
temperatures have significant negative impact for poorer districts with a 1°C rise in temperature
leading to nearly 4.7 percent fall in growth rate of district per capita income. Second, higher
temperatures not only have level effects, but also growth effects, especially for richer districts.
This study suggests that credit access, electrification and urbanization and increased roads and
market network may play a significant role in mitigating the negative impact of climate change.
A study by Jain et al (2020) investigates the impact of temperature on economic activity in India
by using state-level data from 1980-2015. The study estimates that a 1 ◦C increase in
contemporaneous effect reduces the economic growth rate that year by 2.5 percentage points. It
indicates that the adverse impact of higher temperatures is more severe in poorer states and in the
primary sector. Their analysis of lagged temperatures suggests that the effects are driven by the
contemporaneous effect of temperature on output. The study does not find evidence of a
permanent impact of contemporaneous temperatures on future growth rates.
In their study on Indian manufacturing, Somanathan et al (2021) show that the effect of
temperature on labor is an important part of the explanation. Using microdata from selected firms
in India, they estimate reduced worker productivity and increased absenteeism on hot days.
Climate control significantly mitigates productivity losses. In a national panel of Indian factories,
annual plant output falls by about 2%.
Mani and Markandya (2022) carried out an analysis using a reduced-form model to estimate the
relationship between climate change and consumption expenditure taken as a proxy for living
standards. Generally, coastal areas are considered vulnerable. This study shows there are several
moderate to severe hot spots in inland areas: central, northern, north western, which are more
vulnerable
4.2. Policies for Reducing Carbon Emissions

Reducing carbon emissions and accelerating energy transition is a challenge as well as an
opportunity. In the COP26 meeting at Glasgow, Prime Minister Narendra Modi announced that
India will aim to attain net zero emissions by 2070. Net zero, or becoming carbon neutral, means
not adding to the amount of greenhouse gases in the atmosphere.
China has announced plans for carbon neutrality by 2060, while the US and EU aim to hit net
zero by 2050. PM also announced that India will draw 50% of its consumed energy from
renewable sources by 2030, and cut its carbon emissions by a billion tonnes by the same year.
India wants commitments of developed countries on providing finance, transfer of technology
and emission reductions due to historically high consumption patterns. Climate justice is another
issue. Developed countries are historically responsible but rich in developing countries also have
to pay for their consumption patterns. The ssues relating to climate change were also discussed at
G20 meeting held at Delhi in 2023.
A multi-pronged action plan with a monitorable implementation strategy covering all major
carbon emitting sectors can help accelerate India’s progress towards the net zero goal. Without
any policy action, India’s CO2 emission level may rise from 2.7 gigatonnes (in 2021) to 3.9
gigatonnes by 2030. A policy mix comprising a carbon tax of rupee equivalent of US$ 25 per
tonne, current plans on progressively increasing the share of non fossil (solar, wind) fuel in the
energy mix, production and use of EVs and green hydrogen, and regulatory measures to
incentivise resource allocation for green projects, could reduce CO2 emissions to 0.9 gigatonne
by 2030. Higher rates of carbon tax can reduce the emission level further. Action on all fronts, to
32
be sustained over decades, however, would invariably require a people’s movement, proposing
feasible solutions, adapting to green lifestyles, and supporting Government initiatives (RBI,
2023)
What are the policies needed to face the impact of climate change for agriculture? Economic
Survey 2017-18 says that India needs to spread irrigation against a backdrop of rising water
scarcity and depleting groundwater resources. India pumps more than twice as much
groundwater as China or United States (GOI, 2018). There is a need to review of power and
water subsidies.
Agriculture is the sector most vulnerable to climate change. Consistent warming trends and more
frequent and intense extreme weather events such as droughts have been observed. It is well
known that we need adaptation and mitigation strategies regarding impacts of climate change.
Climate-smart agriculture: FAO (2010) discusses strategies needed for climate-smart agriculture.
It is defined as agriculture that sustainably increases productivity, resilience (adaptation),
reduces/removes GHGs (mitigation), and enhances achievement of national food security and
development goals.
It provides examples of climate-smart production systems such as soil and nutrient management,
water harvesting and use, pest and disease control, resilient eco systems, genetic resources etc. It
also discusses about efficient, harvesting, processing and supply chains. Efficient harvesting and
early processing can reduce post-harvest losses and preserves food quantity, quality and
nutritional value of the product (FAO, 2010). This approach also ensures better use of co-
products and by-products, either as feed for livestock, to produce renewable energy in integrated
systems or to improve soil fertility.
The report says that agriculture in developing countries must undergo a significant
transformation in order to meet the related challenges of food security and climate change.
Effective climate-smart practices already exist and could be implemented in developing country
agricultural systems. For small holders, climate smart agriculture offers a triple-win strategy: (a)
improving small holder productivity for nutrition crops; (b) help small holders to adapt to climate
change; (c) mitigate agriculture’s contribution to climate change (Nwanze and Fan, 2016).
Conservativation agriculture: It is developed as an alternative to conventional production

systems.The spread of conservation agriculture (CA) is largely concentrated in the rice–wheat
system in the Indo-Gangetic Plains of the country. The zero-till wheat after rice is the most
widely adopted conserving agricultural technology in the Indian Indo-Gangetic Plains. Thus it
has become the predominant CA based cropping system. Zero-till wheat has the advantage of
significant costs savings and potential yield increase (GOI, 2017). There are many benefits due to
conservation agriculture. These are (a) enhance livelihood security; (b) reduce soil erosion; (c)
more carbon sequestration; (d) enhance resource use efficiency; (e) improve soil health; and (f)
minimize green house gas emissions (GOI, 2017)
Zero Budget Natural Farming (ZBNF): This natural farming has been promoted by Subhash
Palekar17. Nearly 5 million farmers seem to have adopted ZBNF so far. It does not use fertilisers
and pesticides. It only uses natural resources like soil, water, air and, cow urine. Unlike the
chemical farming, the ZBNF does not add to green house gas emissions. The Government of

17 For details on ZBNF, see http://www.palekarzerobudgetspiritualfarming.org/
33
Andhra Pradesh through Rythu Sadhikara Samstha(RySS), Department of Agriculture has

introduced Zero Budget Natural Farming (ZBNF) in 2016 as an alternative to chemical based
agriculture. Andhra Pradesh has become the first state to adopt ZBNF in 2016. The name of the
programme now is changed to Andhra Pradesh Community Managed Natural Farming (APCNF).
This programme now covers 6 million farmers and 8 million hectares18. It is important to scale
up ZBNF to different parts of India to improve incomes, environment, adapt and mitigate to
climate change.
Sectoral break up of CO2 Emissions
A sectoral break up shows that metal industries, electricity and transports, owing to their
dependency, both direct and indirect, on fossil fuels, are the highest emission-intensive sectors,
together accounting for around 9 per cent of India’s total GVA in 2018-19 (Table 23).
Table 23: Sector-wise Share in GVA and CO2 Emission Intensity (2018-19) in India
Sector Share in GVACO2 Emission Intensity (Metric
Tons of CO2 Emissions per US$
1 million Output)
Agriculture, forestry and fishing 14.8 -
Agriculture, hunting, forestry 13.8 84.7
Fishing and aquaculture 1.0 4.1
Mining 2.6 -
Mining and quarrying, energy producing products - 382.1
Mining and quarrying, non-energy producing products - 185.2
Manufacturing 18.3 -
Food products, beverages and tobacco 2.0 11.9
Textiles, apparel and leather products 2.4 37.8
Metal products 2.6 2796.6
Machinery and equipment 4.6 67.0
Electricity, gas, water supply and other utility services 2.3 -
Electricity, gas, steam and air conditioning supply - 7263.8
Water supply; sewerage, waste management and remediation activities - 110.4
Construction 8.1 26.1
Wholesale and retail trade; repair of motor vehicles 12.3 67.8
Accommodation and food services 1.1 22.0
Transport 3.9 -
Air transport 0.07 1210.4
Land transport 4.0 378.8
Water transport 0.1 1587.7
Financial, real estate, ownership of dwelling and professional services 22.5 -
Financial services 6.0 27.4
Real estate and ownership of dwellings 6.5 48.6
Professional services 8.9 127.9
Public administration and defence 5.7 16.1
Other services 7.1 -
Education 3.7 23.2

18 see https://apcnf.in/
34
Arts, entertainment and recreation 0.3 31.8

Human health and social work activities 1.5 17.5
Other service activities 1.6 77.4
Source: RBI (2023)
Electricity, gas, steam and air conditioning supply has the CO2 emission intensity (7264)
followed by metal products (2797), water transport (1588), air transport (1210), mining and
quarrying (382) and land transport (379). In contrast, wholesale and retail trade, financial and
professional services, including information and computer related services, professional,
scientific and technical services, comprising more than 27 per cent of India’s overall GVA, are
among the relatively low emission-intensive sectors (RBI, 2023).
It may be noted that Although industrial sector emissions are higher as compared with
agriculture and services sectors, emission intensity of agriculture sector, which involves both
energy related emissions and non-energy related emissions (such as N2O and CH4) is higher
than certain industries such as textiles, machinery and equipment as well as construction
activity. With energy production driving around three-quarters of global GHG emissions,
changing the energy-mix – away from non-renewables to renewables – is critical. In terms of the
overall energy-mix, fossil fuel-based energy sources, viz., coal, oil and natural gas, continue to
dominate energy consumption in India. Within fossil fuels, coal is the major source followed by
oil. The share of coal in India’s electricity production is around 60 per cent. The need to shift to
renewables as soon as possible is obvious.
In order to achieve targets of Indian government, there is a need to have preparations to reduce
carbon emissions at state level and district level including LIFE (Life Style Changes for
Environment).
5. FISCAL POLICY
One of the important policy levers for boosting growth is to use the fiscal space to encourage
demand. Fiscal space in India is likely to remain limited in the foreseeable future unless
tax/GDP ratio and non-tax revenue improve. And if growth starts to slow down, this will make
the task of fiscal consolidation even more challenging. Lowering the deficit and debt to more
sustainable levels is imperative for ensuring macroeconomic stability which in turn is an
important precondition for growth especially amidst growing global uncertainty.
As Table 24 shows the general government outstanding liabilities were less than 70% during the
period from FY11 to FY18. But it accelerated to 89.4% in FY21 although it declined to 85% in
2022-23. This is significantly higher than FRBM target of 60% and it is a risk for medium-term
macroeconomic stability.
Table 24: Fiscal Deficit and outstanding liabilities (% of GDP): Centre and States
Year Gross Fiscal Deficit Outstanding Liabilities
Centre States Centre States
2011-12 5.9 2.0 51.7 23.2
2012-13 4.9 2.0 51.0 22.6
2013-14 4.5 2.2 50.5 22.3
2014-15 4.1 2.6 50.1 22.0
2015-16 3.9 3.0 50.1 23.7
2016-17 3.5 3.5 48.4 25.1
35
2017-18 3.5 2.4 48.3 25.1

2018-19 3.4 2.4 48.5 25.3
2019-20 4.7 2.6 51.6 26.7
2020-21 9.2 4.1 61.7 31.0
2021-22 6.7 2.8 60.2 29.3
2022-23 6.4 2.8 61.0 (RE) 27.5 (RE)
2023-24 5.8 (RE) 3.1 (BE) --- 27.6 (BE)
2024-25 5.1 (BE) -- --
PA: Provisional Accounts; RE: Revised Estimates; BE (Budget estimates)
Source: RBI (2023), Annual Report 2022-23,
States have done well to reduce fiscal deficit from 4.1% during Covid-19 year 2020-21 to 2.8%
in 2021-22 and 2022-23.
5.1. Fiscal Federalism
In a large country like India, states play an important role in fiscal policy for improving
economic and social development. Consolidation in state finances is equally important as they
spend more than the Centre. The state governments allocate, significant amount of funds to
agriculture, health and education in their budgets.
Table 25: State-wise Gross Fiscal Deficit and Revenue Deficit
Gross Fiscal Deficit Revenue Deficit
2021-22 2022-23 (RE) 2023-24 (BE) 2021-22 2022-23 2023-24
(RE) (BE)
Andhra Pradesh 2.2 3.6 3.8 0.8 2.2 1.5
Bihar 3.9 9.2 3.0 0.1 3.8 -0.5
Chattisgarh 1.5 3.2 3.0 -1.1 -0.6 -0.7
Gujarat 1.2 1.5 1.8 -0.3 -0.3 -0.4
Haryana 3.6 3.3 3.0 2.3 1.8 1.5
Himachal Pradesh 3.0 6.4 4.6 -.06 3.2 2.2
Jharkhand 0.7 2.2 2.7 -1.9 -2.4 -3.1
Karnataka 3.3 2.7 2.5 0.7 0.3 0.5
Kerala 4.9 3.5 3.4 3.2 1.9 2.1
Madhya Pradesh 3.3 3.6 3.8 -0.4 -0.1 0.0
Maharashtra 2.1 2.7 2.5 0.5 0.6 0.4
Odisha -3.1 2.8 3.0 -6.5 -2.3 -3.1
Punjab 4.5 4.9 4.7 3.0 3.5 3.3
Rajasthan 4.0 4.3 4.0 2.1 2.3 1.6
Tamil Nadu 4.0 3.2 3.4 2.2 1.3 1.4
Telangana 4.1 3.8 4.0 0.8 -0.2 -0.3
Uttar Pradesh 2.0 3.6 3.2 -1.7 -2.4 -2.6
Uttarakhand 1.4 2.7 2.7 -1.5 -0.8 -1.3
West Bengal 3.7 4.0 3.8 2.3 2.6 1.8
All States/UTs 2.8 3.4 3.1 0.4 0.5 0.1
North Eastern
States and
Sikkim
Arunachal 3.1 7.5 5.9 -15.3 -14.6 -7.1
Pradesh
Assam 4.4 8.1 3.7 0.2 3.0 -0.5
Manipur 4.9 6.4 5.7 -4.0 -15.0 -14.9
Meghalaya 5.6 4.4 3.3 -1.7 -3.5 -4.7
Mizoram 1.3 7.0 3.2 -2.2 -1.3 -1.1
Nagaland 0.8 6.3 2.7 -5.1 -3.3 -1.7
36
Sikkim 2.4 4.4 4.3 -1.1 -2.0 0.1

Tripura -0.1 4.0 5.3 -2.4 -0.6 0.0
Source: RBI (2023)
In 2022-23 (RE), the gross fiscal deficit as per cent of GSDP was 4% or above for 4 states:
Himachal Pradesh, Punjab, Rajasthan and Telangana (Table 25). It was between 3.5% and 4% of
GSDP for Andhra Pradesh, Madhya Pradesh and West Bengal. North Eastern states also have
high fiscal deficits. The revenue deficit is more than 3% of GSDP for Bihar, Himachal Pradesh
and Punjab. It was between 2% and 3% for Andhra Pradesh, Rajasthan and West Bengal.
Finance Commission and North-South Divide
In February 2023, the chief ministers of three Southern states protested alleging
discrimination by the Centre in allocation of funds to states. Speaking at a protest in Delhi,
the Karnataka Chief Minister mentioned that the state gives Rs100 (in terms of revenue) to
the Centre, but gets back only Rs13. The Finance Minister has responded to the allegations
saying that Karnataka got all the agreed allocated funds. Rightly, Ms. Sitaraman has
clarified that devolution of funds to the states is done based on the recommendations of
the Finance Commission and she had no discretion in the allocation of tax funds.
It is not the first time we have seen this protest by the Southern states. The 11th Finance
Commission report submitted in 2000 reduced the percentage share for high and middle-income
states in the total tax. In the wake of that report, Chandrababu Naidu, the then Andhra Pradesh
Chief Minister, a key component of the Atal Bihari Vajpayee led NDA coalition, complained on
the commission’s recommendations. He led a protest of eight high and middle states publicly in
August 2000. They challenged the traditional role of the finance commission as federal equalizer,
condemned it for encouraging fiscal and reproductive profligacy.
The Sixteenth Finance Commission was appointed recently with Arvind Pangariya as its
Chairman. The Finance Commission determines the vertical share - how much of the Centre’s
tax revenue should be given away to States and horizontal shares - how to distribute that among
States. The Fourteenth Finance Commission had raised the shares of states from 32% to 42% of
the divisible pool of union taxes while the Fifteenth Finance Commission recommended 41%
when the number of states was reduced to 28. It looks like there is no scope for increasing this
share, as there are fiscal imbalances for the Centre with 6.5% fiscal deficit and 58% debt in 2022-
23.
However, the Sixteenth Finance Commission should look into the issue of cesses and surcharges,
which increased from around 10% of gross tax revenue (GTR) in 2011-12 to 20% in 2019-20. In
fact, the ratio of states in Centre’s GTR declined from 36.6% in 2018-19 to 30.2% in 2022-23.
This is an important issue to be considered by the new commission.
Horizontal distribution formula of the Finance Commission is an important instrument for

tacking inequalities across states. In one of his articles on inter-state inequalities, YV Reddy
(former RBI Governor) indicated that barring the Finance Commissions, all other public
institutions did not focus on the inequalities among states19.

19 See Reddy (2019, 2022)
37
The existence of wide inter-state disparities in a vast country like India is well recognized. South
Indian states have achieved higher economic growth and human development. Similarly, states in
the Western region have done well in economic growth. Industry, infrastructure and high-income
services are also concentrated here. Credit, private investment including foreign direct
investment and exports are higher in these states. Similarly, state capacity in implementation is
also much better. As a result, the per capita GSDP is high in both South and Western parts of
India. On the other hand, per capita GSDP and human development are low in several States
from the North of Vindhyas. Apart from low private investment, state capacity in spending and
implementation are also relatively low in these states.
The empirical evidence shows that inter-state disparities in per capita GSDP are diverging than
converging. The disparities across states have been widening when we consider comparable data
on per capita gross state domestic product (GSDP) from Twelfth Finance Commission to
Fifteenth Finance Commission – the coefficient of variation across states increased from 0.46 to
0.67. The disparities in per capita GSDP are the highest for the data given in the report of
Fifteenth finance commission. In contrast, the regional disparities in human development such as
literacy, school enrolment, infant mortality, life expectancy etc. seem to be converging. This is
not surprising as less developed states will catch up with developed states in human development
indicators, as there are asymptotic limits for these criteria. Moreover, many of the poorer states
could contribute more to economic development because of demographic dividend. The share of
old age population in Bihar is likely to be 8% while in Kerala it would be 17% in 2036.
Whether the constitutionally mandated finance commissions, appointed every five years to
recommend allocation of taxes between centre and states and among states, are agents of
profligacy or discipline is subject to heated political debate. Southern and western state
politicians and civil servants see it as a protector of fiscal irresponsibility and population
expansion.
Traditionally, as heirs of redistributive philosophy of the founding generation, the finance

commission has been seen as the rectifier of unacceptable disparities among the federal states. At
the same time, the concerns of the states that are South of the Vindhyas have to be addressed.
There is a feeling among the South Indian States that they are being penalized for better
performance than those of less developed States. The terms of reference of the 15th Finance
Commission were quite contentious as it was asked to take into account 2011 population figures
instead of 1971 numbers.
For every rupee they contribute to the Centre’s taxes, the South and Western regions get back
less than a rupee while less developed states in the North and East get much more than a rupee.
In a large diverse country like India, cross-subsidisation of poorer states by the developed states
is inevitable and acceptable. However, the share of union taxes for Southern states has declined
from 21.1% in the 11th Finance Commission to 16% in the 15th Finance Commission (Table 26).
Given the North-South divide in the performance and widening gap, how much more transfers
and how long the Southern states will tolerate this arrangement. Another political issue is that the
delimitation that is due in 2026 will result in a reduction in parliamentary seats of the southern
States. It is a double blow for the South, which is performing well in development with low
growth of population. The South is also unhappy with ‘one size fits all’ approach on centrally
sponsored schemes.
38
Table 26: Inter se Shares of Union Taxes – Groups of States

States 11th 12th 13th 14th 15th
Southern 21.073 19.785 18.575 17.708 16.032
North 28.908 29.363 29.162 28.927 30.657
North East 1.857 1.951 2.281 4.229 5.031
Punjab,
Himachal,
Goa, Sikkim,
Uttarakhand 2.22 3.246 3.795 4.087 4.465
Maharashtra,
West Bengal,
Gujarat 15.029 15.623 15.504 15.929 17.052
Odisha, Assam 8.341 8.396 8.407 7.753 7.76
Source” Mohan (2023) Computed from Reports of the 11th ,12th ,13th ,14th and 15th FCs
What is the solution for this problem of South-North divide? There is no easy remedy for this
political challenge. The 16th Finance Commission should consider the continuous fall in the share
of Southern states and make suggestions for compensating them. Is there any need for change in
the devolution formula? But, the solution hast to be found beyond the finance commission. As
this North-South divide keeps coming up frequently, Centre and States have to discuss and
decide the optimum path for avoiding this problem. One can also think of setting up a
stabilization fund, which can be distributed as grants when there is a significant fall in the share
of union taxes. Any innovations in GST would also help. Setting up independent Fiscal Council
also would be useful to discuss these issues. Basically, we have to find an answer for
incentivizing the better performance states like South India while giving legitimate share of taxes
for less developed states in the North.
Inspite of progressive central transfers the inter-state disparities in income are increasing. In
other words, competitive market forces are helping the developed states to grow faster. The low-
income states should not have complacency because of higher transfers. These states should
develop physical infrastructure, human capital, and state capacity and attract private investment.
Bifurcation of large states into smaller states may also lead to better development. The medium
term solution is that states should converge in per capita income. This should lead to some
equalization of shares of union taxes between the North and the South.
Some other issues to be considered by the Sixteenth Finance Commission are: more incentives to
tackle climate change, a relook at the revenue deficit grants, transfer of funds to local bodies,
freebies by both Centre and States, and revamping of Centrally Sponsored Schemes (CSS)20. In
the case of CSS, states may be involved in designing the schemes with more flexibility. There
should be some cap on the freebies as percentage of revenue expenditure. Recommendations on
freebies should apply to both Centre and states. The suggested independent fiscal council may
also provide a debt and fiscal sustainability analysis based on fiscal rules.
Fiscal policy thus can be used for reducing inter-regional disparities. In general, it can be used
for achieving inclusive development 21 . Taxes, expenditures and subsidies are the major
instruments of fiscal policy. Some advocate measures such as redistribution of assets and wealth
in favour of the poor via higher tax rates for the rich. In order to reduce inequalities, richer
sections have to pay much more taxes. The tax/GDP ratio has to be raised with a wider tax base
and removing exemptions for corporates.

20 See Reddy (2024)
21 On macroeconomic policies, see Goyal (2017)
39
Finances at the level of Panchayats
All over the world it is recognized that decentralization in terms of transferring power to local
bodies is important for development. The performance of PRIs (Panchayati Raj Institutions) and
urban local bodies in many states has not been satisfactory. The PRIs have to be strengthened
for achieving growth with equity. The States would like to have more transfers from the Centre
but are silent on transfers to local bodies. For chief ministers of States, decentralization stops up
to states only
Reserve Bank of India (RBI) released a report entitled “Finances of Panchayati Raj Institutions”,
in January, 2024 (RBI, 2024). This Report presents an analysis of the fiscal position of the
Panchayati Raj Institutions (PRIs), covering around 75 per cent of the total number of Rural
Local Bodies (RLBs) in India. The recommendations of various Finance Commissions and
constitutional amendments, is to enhance transparency and accountability at the Panchayat level
and contribute to their empowerment. Better and more efficient deployment of tax and non-tax
instruments would help them to improve the quality of their services and the level and depth of
their developmental efforts.
The Report further points out that financially and functionally empowered PRIs can also
contribute actively to climate change resilience. PRIs are well-equipped to identify the adoption
of climate-resilient farming methods and promote renewable energy sources like solar panels and
biogas plants, thus reducing reliance on fossil fuels and mitigating climate change.
The study indicates how panchayats earn only 1% of their income through taxes, with the rest
being sourced from Centre and State grants. Greater autonomy of panchayats results in better
governance and superior outcomes in agriculture, rural development , health and education. The
RBI study showed that the panchayats which, scored high on the health, nutrition, and sanitation
also had lower rural infant mortality rates.
5. CONCLUDING REMARKS
We examined regional variations in growth, inclusion and sustainability in India. In a vast

country like India, there are large inter-regional variations in development. As the British
economist Joan Robinson once said: “Whatever you can rightly say about India, the opposite is
also true.”
Our analysis showed per capita GSDP is diverging while human development indicators are
converging. However, there are still significant disparities in the levels of human development
indicators across states.
The less developed states have lower levels of per capita GSDP and human development and
higher levels of malnutrition. However, some of the developed states like Punjab, South Indian
states have problems of higher debt and fiscal deficit problems. Similarly, Gujarat has high-
income inequalities and higher malnutrition levels. Kerala has second-generation problems. In
other words, each state should have policies to achieve the development goals. The less
developed states like Bihar, Uttar Pradesh, Madhya Pradesh will contribute more in economic
and social development in future because of demographic dividend.
40
The approach of fiscal federalism should solve the problems of north-south divide in central tax
and other allocations. Similarly, there should be devolution of powers to panchayats and urban
bodies for effective implementation of policies.
Ultimately, of course, it is interpersonal (i.e. inter-household) inequality in the distribution of

income and assets, which need to be reduced. The reduction of inter-regional inequality is merely
a means to this ultimate end. It is important means for two reasons. First, millions of poor
households are concentrated in a few regions; therefore, development of these regions can bring
about a rapid reduction in the size of the poverty population. Second, the bulk of public
investment flows into different sectors and a tilting of the investment particularly in
infrastructure facilities in favour of less developed regions, can trigger private investment which
in turn will generate new employment and income streams for the poor.
To conclude, India is now aspiring to achieve the status of a developed nation by 2047 with at
the 100th anniversary of independence. States spend 60% of the total government expenditure;
70% of education and health spending; two-thirds of capital expenditure; 79% of government
employees are employed by the states. The role of states thus is equally or more important in
achieving the goals of higher economic growth, inclusive and sustainable development. .
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Distinguished Professor, ICFAI, Hyderabad, Editor, Economic and Political Weekly,

At the 58th Annual Conference of the Indian Econometric Society (TIES),

Regional Dimensions in India:

2. CONVERGENCE HYPOTHESIS FOR INCOME ACROSS INDIAN STATES

The results in Table 1 reveal the following.

Period Constant Initial Share of Sectoral Adjusted R2 F

Source: Author’s estimates

2.3. Convergence/divergence of Industrial Per Capita GSDP across States

2000-01 to 2019-20 -0.0802 0.0153** 0.2045 5.8857*

Notes: 1. Figures in parenthesis represent t values of the regression coefficients.

Values Standard Deviation of LN Per Capita SDP

Source: Author’s estimates

COV of Per Capita SDP

Weighted COV of Per Capita SDP

Source: Author’s estimates

COV Per Capita Primary

COV Per Capita Secondary

Weighted COV of Per Capita Secondary

Fig 5. Interstate Disparities (Coefficient of Variations, COV) in Per Capita Secondary

Fig 6. Interstate Disparities (Coefficient of Variations, COV) in Per Capita Tertiary

Source: Author’s estimates

2.7. Determinants of Economic Growth Across States

Investments and Exports at State Level

Table 6. Credit-Depost Ratio Across Regions in India (Place of Utilisation): 2023

Table 8: Share of Top 10 Districts in Exports (%): 2021-22

2.7. Aspirations of States to Achieve Higher Growth in State Domestic Product

3. REGIONAL VARIATIONS IN INCLUSIVE DEVELOPMENT

As part of inclusive development, we discuss regional variations in agriculture, achieving zero

Himachal Pradesh 2.26 22.8

3.2. Achieving Zero Hunger

(2) Inspite of decline, 35% of Indian children suffer from stunting

(5) At the same time, obesity is increasing

and incomes, see Krishna and Meenakshi (2022)

Recently MOSPI (Ministry of Statistics and Policy Implementation) released a report on

Table 13. Multi Dimensional Poverty Ratio at State level

3.4. 1. Regional Inequalities in Income and Wealth

Fig 7. Income Inequality Across States

Income Inequality (Rural+Urban) based on

Table 15: Wealth Inequality (Rural+Urban)

Fig 8. Wealth Inequality Across States

Wealth Inequality (Rural+Urban), Gini

Source: Based on data in Anand and Thampi (2016)

Bihar 0.51 0.67 0.23

3.5. Regional Disparities in Human Development

3.6. Policies for Reducing Inequalities

Structural change in Employment

Table 19. Structural Change: Share in Employment (per cent)

Women’s Work Participation Rates

Rural Urban Rural + Urban

Notes: ps =Principal status; ss: subsidiary status

Haryana 20.5 18.2 19.7 19

Table 22: Unemployment is concentrated among educated youth (%)

Fig 4. Informal Enterprises: Percentage of workers (Male+Female) engaged in proprietary and

3.6.. Some other issues and policies for reducing inequality

4. CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT

4.1.Impact of Climate Change in India’s States

4.2. Policies for Reducing Carbon Emissions

Conservativation agriculture: It is developed as an alternative to conventional production

Andhra Pradesh through Rythu Sadhikara Samstha(RySS), Department of Agriculture has