industrial and services sectors showed convergence before the reforms and divergence afterwards. Table: 6.1 Aggregate Regional Inequality in Indian Economy (1980-2010) Aggregate Aggregate Aggregate Years Years Years inequality inequality inequality 1980-81 .28 1990-91 .30 2000-01 .33 1981-82 .27 1991-92 .30 2001-02 .33 1982-83 .27 1992-93 .34 2002-03 .35 1983-84 .27 1993-94 .33 2003-04 .35 1984-85 .28 1994-95 .32 2004-05 .37 1985-86 .29 1995-96 .34 2005-06 .40 1986-87 .28 1996-97 .35 2006-07 .40 1987-88 .29 1997-98 .34 2007-08 .41 1988-89 .29 1998-99 .36 2008-09 .40 1989-90 .31 1999-00 .33 2009-2010 .41 Source: Calculated from the Data from CSO and CMIE. We find from the table that the aggregate inequality that remained almost unchanged (around .28) during the 1980s but showed a distinctly rising trend during the 1990s and 2000s (from .30 to .41). India has seen a constant rise in regional disparity from 1980 to 2010 followed by a slight fall in 1999-00 (from .36 to .33). Regional inequality dramatically increased in 1992 after the liberalization reforms started. On regional inequality there is an alternative theoretical literature that focuses on the increasing returns associated with the process of growth that may lead to regional divergence. This is the literature on agglomeration economies (Duranton and Puga 2004; Rosenthal and Strange 2004). The central proposition of this literature is that economic
industrial and services sectors showed convergence before the reforms and divergence afterwards. Table: 6.1 Aggregate Regional Inequality in Indian Economy (1980-2010) Years Aggregate inequality Years Aggregate inequality Years Aggregate inequality 1980-81 .28 1990-91 .30 2000-01 .33 1981-82 .27 1991-92 .30 2001-02 .33 1982-83 .27 1992-93 .34 2002-03 .35 1983-84 .27 1993-94 .33 2003-04 .35 1984-85 .28 1994-95 .32 2004-05 .37 1985-86 .29 1995-96 .34 2005-06 .40 1986-87 .28 1996-97 .35 2006-07 .40 1987-88 .29 1997-98 .34 2007-08 .41 1988-89 .29 1998-99 .36 2008-09 .40 1989-90 .31 1999-00 .33 2009-2010 .41 Source: Calculated from the Data from CSO and CMIE. We find from the table that the aggregate inequality that remained almost unchanged (around .28) during the 1980s but showed a distinctly rising trend during the 1990s and 2000s (from .30 to .41). India has seen a constant rise in regional disparity from 1980 to 2010 followed by a slight fall in 1999-00 (from .36 to .33). Regional inequality dramatically increased in 1992 after the liberalization reforms started. On regional inequality there is an alternative theoretical literature that focuses on the increasing returns associated with the process of growth that may lead to regional divergence. This is the literature on agglomeration economies (Duranton and Puga 2004; Rosenthal and Strange 2004). The central proposition of this literature is that economic