March 22, 2017

Income Divergence: Governance or Development Model?

In this Mint article, Senior Fellows, Vivek Dehejia and Praveen Chakravartyuse a novel luminosity-based data set which shows that in addition to economic divergence among states, income gaps are widening dramatically *within* states as well.


".....We first establish that state luminosity is indeed correlated tightly with state GDP, i.e., richer states have higher luminosity, and poorer states, lower. There is a 75-80% correlation between luminosity and state GDP across the years 1992-2013. Not so surprisingly, there is massive variation in luminosity levels across these districts, in line with income disparity. As many as 380 of the 387 districts in these 12 states are on average just one-fifth as bright as metro cities like Mumbai and Bengaluru at night. Even excluding the metros, 90% of all districts are just one-third as bright in the night as the top 10% of all districts. What is more striking is that this ratio is only worsening between 1992 and 2013...


....Curiously, West Bengal is the only state to experience a convergence among its districts while Gujarat shows neither divergence nor convergence. All other states show strong divergence trends, in line with the trend observed on an inter-state basis using per capita GDP. In essence, not only is the income gap across rich and poor states of India widening, but so are income gaps across rich and poor districts within each state, albeit using luminosity as a proxy for income."


Topic : State Capacity / In : OP-EDS
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