Income ranking of Indian states and their pattern of urbanisation

Abstract

This chapter looks at the contribution of the growth of towns, particularly small and medium towns, towards the urbanisation process of India. However, instead of just looking at the broad Indian macro picture, we undertake a disaggregated analysis of urbanisation of the Indian states. Our analysis delivers a more accurate approach of the relation between the demographic change happening in small and medium towns and the economic growth at the scale of the Indian states. For the purpose of our analysis, we have considered the 15 largest states in India which represent around 90 % of India’s population and we have further classified those states into rich, middle and poor groups or clubs of states, based on their per capita income level. In our study we examine the disaggregated urbanisation process in India using the Indiapolis and Census databases. Our analysis shows that the extent (number) and speed (growth) of urbanisation is higher in the richer states, which also have a higher per capita National State Domestic Product (NSDP) growth over the analysed period as compared to the states from the middle and poor groups. However, there is a fair amount of variation in the growth of towns across all categories of states. This is underlined in a second part using the UA data set. It enables a better understanding of the link between the larger agglomerations’ dynamics and the growth of smaller towns. Then, in a third part, a preliminary analysis of the sectoral growth rates of income, employment, and productivity by city-size classes and states, notably for the industrial sector, indicates that small and medium towns can play an important role in the growth of manufacturing activities.