Structural Change, Economic Growth and Trade: Case for Regional Reallocation of Investment in India

The economic structure and rates of growth across the states in India are markedly different, with significant disparities in income per capita growth as well as sector-specific performance. The high-income states have typically led the Indian growth story with their high growth rates, while regional inequality continues to increase. The recent policy focus in India has been to encourage inclusive growth across sectors and disparate regions within the country through development of core public services (water, education, transport, healthcare, etc), especially in the poor and special status states. To understand the structural challenges facing India, it is important to understand which economic sectors have been the most critical in driving regional inequality over the years and how these sectors impact economic growth.