We examine the role of the enforcement of property rights, human capital formation, and the efficiency of various components of state governments' developmental expenditure on states’ economic growth and interstate income inequality. Together with private sector investment in rural areas, property rights enforcement, human capital, government expenditures on economic services, and health and education are found to have positive effects on states’ growth. We also observe that the interstate difference in the provisioning of government economic services is the leading factor in contributing to interstate income divergence in India. These findings can serve as vital technical inputs for formulating economic policies to achieve faster economic growth and mitigate regional income inequality in transitioning developing economies like India and hold greater relevance for other developing economies on their way to experiencing similar social and economic transitions.

我们研究了产权执法的作用、人力资本形成以及州政府发展支出的各个组成部分对州经济增长和州际收入不平等的效率。与私营部门在农村地区的投资一起，产权执法、人力资本、政府在经济服务、卫生和教育方面的支出都对国家的增长产生了积极影响。我们还观察到，提供政府经济服务的州际差异是导致印度州际收入差异的主要因素。