ISSN (Online) - 2349-8846
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Will GST Exacerbate Regional Divergence?

This article analyses the extent of regional disparities in income per capita in India, considering both disparities amongst and within major states. For within-state inequality, this article is the first to use a “nightlights” luminosity data set as a proxy for gross domestic product per capita, whereas the choice of a crisper data set, comprising the 12 largest states, yields sharper results than in previous literature. It concludes with a cautionary note on the goods and services tax, which, contrary to the optimists, is likely to further exacerbate, rather than ameliorate, regional income disparities, marking the need for a turn to “place-based” economic policies.


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The authors would like to thank Rithika Kumar, Ishita Trivedi, and Chandrani Sarma for their able research assistance. Versions of this research have appeared as IDFC Institute Briefi ng Papers and in newspaper columns in the Hindu and Mint, as noted in the references.

Updated On : 11th Jul, 2017


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