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In the Seventh Five-Year Plan, the Indian economy crossed the Hindu growth rate (the
term coined by Raj Krishna to refer to the stagnated rate of growth of Indian GDP up to
1980 at 3.5%). After the economic and political instability of 1990-92, in the Eighth
Plan, the economic reforms were implemented by the policy makers. This resulted in the high growth of the economy, and Indian economy became one of the highly growing
economies of the world. The economic development taking place in India, especially
after 1993-94, is a great matter of interest for the researchers as well as for the
common people of India. Undoubtedly, there are indicators of growth like increase in
per capita income and others. However, it will also be interesting to find out whether
there is a convergence in the economic development of the Indian states or not. National
level data indicates that the growth rate of the country is over 8% in the Eighth,
Ninth and Tenth Five-Year Plans, except some bad years, and it is expected that the
annual growth rate will go even further in Eleventh Plan. But whether this growth is
for all or it is just for some states—is the objective of the present study. This has been
done by taking into account the State Domestic Products (SDP) of 18 Indian states.
We have calculated the growth rate of all the 18 states for the period of 1980-81 to
2004-05. The entire period has been divided into two parts: 1980-81 to 1990-91 and
1991-92 to 2004-05. The period 1980-81 to 1990-91 can be referred to as the
pre- Globalization, Liberalization, and Privatization (GLP) period, whereas the period
1991-92 to 2004-05 can be referred to as the post-GLP period. This bifurcation has been
done for finding out the differences in the convergence of growth rate between pre- and
post-GLP. In the pre-GLP period the national level as well as the state level growth
rate in per capita GDP was less than that in the post-GLP period. So it will be interesting
to see whether the increase in the annual growth rate of the country has led to the
convergence or divergence in the growth rate of SDP. This will be the basis for claiming
that the growth rate achieved by the country, especially after GLP, has resulted in a
positive way for all the states in India. This issue has been taken into account by many
research papers (Barro and Sala-i-Martin, 1995; GOI, 2001 and 2002; and Goyal, 2006)
by following different approaches of analysis. Most of the researchers have concluded a
difference in the rate of growth in the SDP of states resulting in the inequality of
resource and opportunity distribution. It has further led to an unbalanced development
of people in different states. The present study also, in line with these studies, traces
the impact of GLP policies at disaggregating level.
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