Per capita income growth among states

Kaushik warned about the dangers of skewed economic development a few days ago. Here is a study by the always interesting Jayati Ghosh and C. P. Chandrasekhar on income growth in Indian states.

Uttar Pradesh, the second largest state economy in aggregate terms, is among the lowest in per capita terms. Meanwhile, Punjab and Haryana, which have relatively small total SDP, have the highest and third highest per capita incomes.

Of course, all this says nothing about intra-State inequalities, which also cannot be assumed to be similar across states. The NSS estimates show that some of the States with highest per capita income have also the highest internal inequalities in terms of per capita consumption expenditure. Thus, the two States with the highest Gini coefficients for per capita consumption (indicating the greatest inequality) are Tamil Nadu (with a Gini ratio of 0.398 in 1999-1000) and Maharashtra (with a Gini ratio of 0.345). These two States are among the highest in per capita SDP.

However, other States with high per capita SDP show relatively less inequality in consumption expenditure. Thus Punjab showed a Gini coefficient of 0.29, while Haryana had a Gini ratio of 0.285 in the same period, for per capita consumption expenditure. Conversely, some States with low per capita SDP had relatively high inequality — such as Uttar Pradesh with a Gini ratio of 0.327 and Bihar with a Gini ratio of 0.318.

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