Convergence in rural development: evidence from India

We analyze state-level data of rural India for the period 1973–1993. The gain in agricultural productivity as measured by a Tornqvist–Theil TFP index shows wide divergence across states over time. While there has been an overall decline in farm–non-farm employment ratio over the entire period, it has shown an increasing trend in some states from the second half of the 1980s. We explore the issue of convergence in rural development that takes into account both the increase in agricultural productivity and non-farm employment in rural areas. We find that there is a strong tendency to converge over time to the level of Kerala, the leading state in the initial period. The speed of convergence is in the range of other studies for convergence in agriculture only.