Convergence Clubs in Incomes across Indian States: Is There Evidence of a NeighboursE¤ect?

I examine the distribution dynamics of incomes across Indian states using the entire income distribution. Unlike standard regression approaches this approach allows us to identify speci\u85c distributional characteristics such as polarisation and strati\u85cation. The period between 1965 to 1997 exhibits the formation of two convergence clubs: one at 50 % and another at 125 % of the national average income. Income disparities across the states declined over the sixties and then increased from the seventies to the nineties. I use the distribution dynamics method to further investigate for a neighbourse¤ect- i.e., whether states that cluster together are neighbouring states. The evidence obtained suggests that there is none. While this initially comes across as an unusual result, it strongly suggests that India being a developing country is yet to develop the required networks across the states to generate spatial interactions