The objective of this study is to investigate the presence of ‘club convergence’ in respect of income among 15 major states in India during 1982–2014 using Markov chain along with stochastic kernel. The distributional dynamics observed among the major states support the process of ‘club convergence’. The empirical findings prove the hypotheses that economies that are similar in their structural characteristics and initial per capita income levels will converge with each other in per capita terms in the long run. The present study empirically re-establishes the hypotheses of ‘low-level equilibrium trap’ caused by low human capital investment. JEL: C14, H51, H52, O49, O53

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A new measure of multidimensional human deprivation index (MHDI) across 24 states (over 4 time points corresponding to NFHS 1, 2, 3 and 4) is suggested here using principal component analysis (PCA). We observe that our weighted MHDI is found to be consistent with the Human Poverty Index (HPI) and the Multidimensional Poverty Index (MPI) introduced by UNDP in 1997 and 2010, respectively. Though most of the states in India have been experiencing a decline of the incidence of MHDI, but club convergence clearly proves that five major states such as Rajasthan, Madhya Pradesh, Bihar, Uttar Pradesh and Odisha are found consistently to be stable in the higher group of MHDI. Lagged MHDI, human capital investments along with availability of infrastructure are the underlying factors of differential MHDI across states. Therefore, allocation of grants should consider these issues of chronic MHDI found in five major states in order to ensure regional balance, equity and social justice in our federal structure.

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