INDIAN REGIONAL INCOME INEQUALITY: ESTIMATES OF PROVINCIAL GDP, 1875-1911

Paul Caruana-Galizia

Economic History of Developing Regions, 2013, vol. 28, issue 1, 1-27

Abstract: After constructing a dataset on Indian provincial GDP per capita between 1875 and 1911, I examine it for levels and trends of provincial income inequality. Cross-sectional dispersion of income was initially high, but declined over time. In terms of levels, internal Indian inequality compared well with a number of European states. Testing for unconditional beta-convergence, I found a tendency for provinces to converge to their steady-state at a rate of 0.6 per cent; 6.7 per cent when controlling for province and year fixed-effects. These results indicate that the likely forces of convergence (mainly driven by transport and communication infrastructure advances) trumped forces of divergence (heterogeneity in social and geographical characteristics). I made no formal attempts to uncover the true drivers of provincial dynamics. Future research would do well to test the dynamic effects of observable provincial geographical and political characteristics on growth.

Date: 2013
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DOI: 10.1080/20780389.2013.805510

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