Arthshastra Indian Journal of Economics & Research

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Has COVID-19 Distorted the State-Wise Convergence in India? An Empirical Analysis


Affiliations
1 1 Manager, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India
2 Manager, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India
3 Assistant Adviser, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India

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The study attempted to analyze the economic performance of Indian States with quarterly data from April 2018 to December 2021 by selecting high-frequency indicators. The majority of the States appeared to have reached their respective prepandemic levels, as indicated by trends in electricity generation, labor-force participation rate (LFPR), bank credit, and tax revenues, by the end of December 2021. However, in terms of indicators such as vehicle registrations and consumer sentiments, most States had not reached their pre-pandemic levels. We found that Sigma (unconditional) convergence among States was not evident for most of the indicators except bank credit, while beta (conditional) convergence slowed down in the aftermath of the coronavirus disease 2019 (COVID-19) pandemic based on indicators such as tax revenue, exports, and capital expenditure. In terms of bank credit, there was an indication of the convergence process coming to a standstill in the aftermath of COVID-19-induced disruptions.

Keywords

Convergence, COVID, Growth

JELClassification Codes : A19, O13, O47

Paper Submission Date : November 24, 2022 ; Paper sent back for Revision : November 28, 2022 ; Paper Acceptance Date : December 1, 2022

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  • Has COVID-19 Distorted the State-Wise Convergence in India? An Empirical Analysis

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Authors

Sudhanshu Goyal
1 Manager, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India
Akash Kovuri
Manager, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India
Ramesh Golait
Assistant Adviser, Regional Economy Monitoring Division, Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Rd, Fort, Mumbai - 400 001, Maharashtra., India

Abstract


The study attempted to analyze the economic performance of Indian States with quarterly data from April 2018 to December 2021 by selecting high-frequency indicators. The majority of the States appeared to have reached their respective prepandemic levels, as indicated by trends in electricity generation, labor-force participation rate (LFPR), bank credit, and tax revenues, by the end of December 2021. However, in terms of indicators such as vehicle registrations and consumer sentiments, most States had not reached their pre-pandemic levels. We found that Sigma (unconditional) convergence among States was not evident for most of the indicators except bank credit, while beta (conditional) convergence slowed down in the aftermath of the coronavirus disease 2019 (COVID-19) pandemic based on indicators such as tax revenue, exports, and capital expenditure. In terms of bank credit, there was an indication of the convergence process coming to a standstill in the aftermath of COVID-19-induced disruptions.

Keywords


Convergence, COVID, Growth

JELClassification Codes : A19, O13, O47

Paper Submission Date : November 24, 2022 ; Paper sent back for Revision : November 28, 2022 ; Paper Acceptance Date : December 1, 2022


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DOI: https://doi.org/10.17010/aijer%2F2022%2Fv11i4%2F172740