South Asian Journal of Social Studies and Economics

Aims: This study aims to examine the structural and sectoral factors contributing to inter-state disparities in Net Domestic Product (NDP) growth across Indian states. It specifically investigates the sectoral contributions—agriculture, industry, and services—in shaping economic performance within high- and low-income state categories.

Study Design: The research adopts a comparative analytical design, classifying Indian states into low-income and high-income groups based on their Per Capita Net State Domestic Product (NSDP), and comparing sectoral growth patterns within and between these groups.

Place and Duration of Study: The study focuses on all Indian states, grouped by income level, using data collected over the period 2011–12 to 2023–24.

Methodology: This study is based entirely on secondary data (panel data) drawn from official government sources, including the Directorate of Economics & Statistics of individual states and the RBI Handbook on Indian States. Analytical techniques include descriptive statistics, and multiple regression analysis to evaluate sectoral contributions to NDP growth across the two income categories.

Results: The analysis reveals a distinct divergence in sectoral growth patterns between low- and high-income states. In low-income states, industrial growth is the primary and statistically significant driver of NDP growth, while agriculture has no meaningful contribution and services are underdeveloped. In contrast, high-income states show a service-led growth pattern, with services having the strongest impact on NDP, followed by industry and a modest but significant role of agriculture.

Conclusion: The findings are consistent with classical development theories such as Kuznets’ structural transformation, Hirschman’s industrial linkages, and Myrdal’s cumulative causation. The study underscores the need for region-specific development strategies, particularly those that support industrialisation and service sector development in low-income states. Such targeted interventions are essential for reducing regional disparities and fostering inclusive, balanced national growth.