Regional growth policy experience in India: the spatial dimension

New Economic Geography (NEG) literature emphasizes that growth of regions across space may show different possible patterns or clustering because of spatial agglomeration of economic activities and spatial spill over in the growth process. Using exploratory spatial data analysis, the paper explores the spatial character of outcome variables of regional growth process—per capita income, growth of per capita income and employment—and its possible determinants. The results reveal that regional growth in India has a definite spatial character, showing different clustering in space: group of rich states, group of backward states, spatial outliers where a rich state is found among poor states or a poor state is seen among rich states. Such spatial patterns are found to be matching with the spatial pattern in possible determinants such as FDI, infrastructure, manufacturing, and service sector’s contribution to regional output. These findings suggest the need for differential policy treatments for different spatial cluster of states. Further, the policy-designs may also need to consider the negative spillover effects of growth process. © 2018, The Japan Section of the Regional Science Association International.