wl-6778-Comparative Macroeconomic Performance and Human Development of India’s States - Does Convergence Remain Elusive?

This article ranks and compares Indian states based on their macroeconomic performance going beyond growth or per capita income. The dual objectives are to – assess inter-state convergence and to reaffirm the relationship between economic performance and human development. In a first, the TOPSIS methodology used here combines various macroeconomic indicators to yield relative scores (MPIs), which allow for regular performance assessments and comparison with State HDI scores (SHDIs). The important observations from this study are that states’ relative rankings based on overall macroeconomic performances (MPIs) differ quite significantly from those based on measures, like growth or per capita income, traditionally relied on, as per the literature. However, despite high rank mobility of state-wise MPIs over years, there is no statistically significant relationship between initial rank status and MPI rank mobility refuting the possibility of laggard states steadily catching up with more developed ones through improved macroeconomic performances per se. There is also a clear lack of correspondence in the rankings by MPI and SHDI. This study underlines the need for according higher priority to education, healthcare and tax revenues by states which are trailing, particularly in years when they are able to record better macroeconomic performances.