Measuring Horizontal Fiscal Imbalance Amongst Indian States: A Club Convergence Approach

Kovuri Akash Yadav (), Anoop K. Suresh (), Samir Ranjan Behera () and Ramesh Golait ()
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Kovuri Akash Yadav: Reserve Bank of India
Anoop K. Suresh: Reserve Bank of India
Samir Ranjan Behera: Reserve Bank of India
Ramesh Golait: Reserve Bank of India

A chapter in India's Public Finance and Policy Challenges in the 2020s, 2025, pp 351-369 from Springer

Abstract: Abstract The study empirically investigates the hypothesis of convergence in states’ per capita own tax revenue using the club convergence methodology put forth by Phillips and Sul in 2007. The results reveal that the 16 select Indian states converged into two clubs over the period from 2001–02 to 2021–22. Further, by applying the panel binary probit model, the study also found that initial economic and social conditions such as share of agriculture in GDP, per capita income and literacy rate play a critical role in determining the positioning of Indian states in their respective clubs.

Keywords: Club convergence; Horizontal fiscal imbalances; Phillips and sul methodology; States’ own tax revenue (search for similar items in EconPapers)
JEL-codes: C33 H71 H77 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-96-2860-5_19

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DOI: 10.1007/978-981-96-2860-5_19

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