What explains Regional Imbalances in Infrastructure?: Evidence from Indian States

Biswajit Mohanty, N R Bhanumurthy and Ananya Ghosh Dastidar ()
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Ananya Ghosh Dastidar: University of Delhi

Working Papers from National Institute of Public Finance and Policy

Abstract: The literature on regional growth suggests that divergences in infrastructure is a major factor behind the wide and persistent regional growth imbalances in India. Using a state infrastructure-expenditure function, the paper examines the possible factors that determine infrastructure expenditure and its implication for regional imbalance in infrastructure creation across 14 major Indian states. We, in the present study, find that factors such as resource mobilization, per capita income, and population density may result in unequal infrastructure expenditure across states. We also find that factors such as more spending by the infrastructure-deficit states, political stability, and positive spatial dependence in infrastructure expenditure among states have a balancing effect on infrastructure creation across regions. These results suggest the need for augmenting the financial capacity of the infrastructure-deficit states and strengthening the positive spatial dependence among states through creation of interstate infrastructure networks (railways, national highways etc.) and conducive investment climate, which could boost competition among states for better infrastructure creation.

Keywords: infrastructure; regional imbalance; spatial dependence; Indian states (search for similar items in EconPapers)
JEL-codes: C31 H54 R11 R12 (search for similar items in EconPapers)
Pages: 22
Date: 2017-06
New Economics Papers: this item is included in nep-geo, nep-gro and nep-ure
Note: Working Paper 197, 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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