Distribution Episodes, Club-Convergence and Polarization in India

Economic growth and convergence of economies are generally considered to be long-run phenomenon. These long-run discussions some time disguise the actual short-run and medium-run dynamics of the distribution and produce an average result, which not only hide intricate details of the distribution, but deceptive too. Additionally, policy makers are often interested in the present, rather than what is going to happen in the economy after fifty or sixty or even after hundred years. To overcome this problem one way is to take short-run dynamics seriously and then analyze convergence (or divergence) or club-convergence of the economies within that particular episode. To this end we introduce a concept viz. distribution episode to study the evolution of distribution of per capita income among the Indian states for the period 1970 to 2013 along with a decomposition exercise to identify the drivers of club-convergence and polarization during the episodes