‘Why growth rates differ’ within India: An alternative approach

Abstract

This article develops an analytical framework based on the economics of steady and non‐steady growth states for explaining variations in growth performance in the context of the Indian economy. This approach follows two directions. The first one is based on a decomposition of growth, as in Denison's work, but along different lines. Some of the results, particularly in respect of contribution of the interaction effect and of labour, emerge to be different from those expected. The second strand of analysis identifies four sets of variables, whose role is assessed, first, as determinants of the pace of growth ‐ over time ‐ at the national level and, second, as determinants of regional growth rates. Finally, the collective role of the variables is analysed through a combination of factor analysis and step‐wise regression.