SECTORAL ANALYSIS OF INCOME CONVERGENCE: EVIDENCE FROM INDIA

This study analyses the sector wise income convergence across Indian states for the sample period 1980-81 to 2007-08. Study includes pre and post liberalisation periods which provide a better understanding on the comparison of the two periods and the effects of liberalization era on the income and regional disparities in India. The results reflects an inconclusive results about the income convergence on aggregate level across Indian states. A mixed response has been found on sectoral basis about the convergence behaviour. There has been a clear indication of convergence in primary and secondary sectors. However, a diverging behaviour of tertiary sector has been observed especially after liberalization and it has been so strong that it outweighs the converging effect of pre-liberalization. The recent decade indicates divergence in all the three sectors.