chapter  9
17 Pages

State–business relations and economic growth in India

ByMASSIMILIANO CALÌ, KUNAL SEN

Introduction In this chapter, we examine the impact of effective state-business relations (SBRs) on economic growth for fifteen major Indian states over the period 1985-2006, using the measure of the quality of SBR developed in Chapter 3. We show that this measure can explain variations in per capita income both across Indian states and over time, independent of other possible determinants of regional economic growth, especially when we control for the possibility of reverse causality – that SBRs in a particular state improve with stronger economic growth in that state. We also show that the effect of SBRs on economic growth is robust to alternate specifications and is independent of other determinants of economic growth.