Impact of fiscal transfers policy on regional growth convergence in India

Shanmugam K. and Shanmugam K. Rangasamy
Authors registered in the RePEc Author Service: Shanmugam K. Rangasamy

Journal of the Asia Pacific Economy, 2024, vol. 29, issue 1, 38-55

Abstract: This study is an attempt to empirically analyze the effect of fiscal transfers on growth and regional growth convergence in India during 2005–2019, using the standard growth convergence model for panel data. Results indicate the growth convergence across Indian States. The regional income gaps reduced at a rate of 17.7–31.9% per annum. The fiscal transfers contribute to the growth of 22 out of 29 States and also contribute significantly to the convergence. Moreover, there is strong evidence for convergence across General Category States and across Special Category States. The average income growth is higher in Special Category States and higher in post global crisis period. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design fiscal transfer policy such that it will speed up the convergence process in India.

Date: 2024
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Working Paper: Impact of Fiscal Transfers Policy on Regional Growth Convergence in India (2022)
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DOI: 10.1080/13547860.2021.1991089

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