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The study re-examines convergence among Indian states by estimating their total factor productivity (TFP) for the period 1990/91–2018/19. The novelty of the study is the decomposition of TFP change into efficiency change and technological change using the Malmquist index in a spatial dependence framework to test convergence. Findings reveal that, on average, productivity increased at an aggregate level for the entire period on account of the impressive growth of technological innovation. However, technological growth convergence could not lead to productivity growth convergence in the second sub-period because of no convergence in efficiency growth. Alongside, while we witness significant spatial spillovers in both technology and efficiency, convergence was observed only with respect to technology growth in the second sub-period. The congruence of technological convergence and significant spatial spillovers indicates that while states may be converging in technology, they do not do so independently but display movements similar to their regional neighbours. [ABSTRACT FROM AUTHOR]

This paper investigates income convergence of Indian states in the post-reform period when markets played a greater role in resource allocation. We analyze stochastic convergence of relative per capita incomes of 19 states for the period 1994–2018 by employing a recently developed panel data approach controlling for structural breaks as smooth shifts. Smooth shifts are modelled using a more flexible Fourier approach that does not require identifying the number, date, and form of breaks. The empirical results, contrary to recent empirical findings, do not support evidence in favour of convergence in per capita income among Indian states. Poor infrastructure, lack of adequate financial development, and weak governance structure coupled with low total factor productivity growth seem to be responsible for the divergence of income. The findings suggest that development intervention in the post-reform period has neither been of the required order nor in the desired direction to help the lagging states to catch up with the leading ones. [ABSTRACT FROM AUTHOR]