IMF Working Papers

Internal Migration, Center-State Grants and Economic Growth in the States of India

Author/Editor:

Paul Cashin ; Ratna Sahay

Publication Date:

July 1, 1995

Summary:

This paper examines the growth experience of twenty states of India during the period 1961-91, using cross-sectional estimation and the analytical framework of the Solow-Swan neoclassical growth model. We find evidence of absolute convergence--initially-poor states did indeed grow faster than their initially-rich counterparts. There has also been a widening of the dispersion of real per capita state incomes over the period 1961-91. However, relatively more grants were transferred from the central government to the poor states than to their rich counterparts. Significant barriers to population flows also exist, as net migration from poor to rich states responded only weakly to cross-state income differentials.

Series:

Working Paper No. 1995/066

Subject:

Disposable income Expenditure Migration National accounts Personal income Population and demographics Public expenditure review

Notes:

Examines the growth experience of twenty states of India during the period 1961-91, using cross-sectional estimation and the analytical framework of the Solow-Swan neoclassical growth model. Also published in Staff Papers, Vol. 43, No. 1, March 1996.