ABSTRACT
This chapter shows that dispersion of industrial activity has proceeded with a sluggish pace with the dominant states still cornering substantial shares in investments, output and employment despite successive changes in policy regime. Output and employment growth in the manufacturing sector registered a slow growth in the 1990s, the period that coincides with economic reforms in India. The faster growth in productivity in the post-2000 period, there has been significant variation in labour and total factor productivity across states. The differences in infrastructural development at the regional level explain a greater part of the variation in manufacturing productivity growth across Indian states. Greater access to power, transport and communication facilities substantially influence Total Factor Productivity at the regional level. This study strengthens the argument that targeting public investment on infrastructures that favour the convergence of industrial productivity constitutes an important element of a strategy of balanced regional growth in India.
