Productivity and Convergence in India: State Level Analysis

Total factor productivity plays an important role in the growth of the economy. Using recently available state level data over 1993 and 2005, we find widespread regional variation in productivity changes. In the beginning of the liberalization era, improvement in technical efficiency contributes to the growth of the productivity. In the later periods, however, the productivity growth is governed by the growth in technical progress. We also study about convergence in state level and find a tendency of convergence in productivity growth though only states that are efficient remain on the production frontier.