Nonlinearity between Infrastructure Inequality and Growth: Evidence from India

Infrastructure, through its direct and indirect effects, has a bearing on growth, equity and overall development of a country. Widening inequality has significant implications for growth and macroeconomic stability leading to suboptimal use of human resources and concentration of decision-making in the hands of a few. This article discusses the relationship between growth and infrastructure inequality in India since the 1990s. Tracing three dimensions of infrastructure inequality over time, this study tests the existence of its nonlinear relationship with growth. Empirical estimates reject the inverted U-shaped and U-shaped patterns between disparity in infrastructure and economic growth. Accelerated decline in infrastructure inequality is depicted with growth in India across infrastructure sectors of transport, energy and communication. Policymakers need to sustain efforts to eradicate infrastructure disparity by following a growth-oriented approach. JEL: C38, H54, I3, O18, O47, R11