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Unformatted text preview: Burgess & Pande (2003) Credit and Microfinance “The banking system touches the lives of millions and has to be inspired by larger social purpose and has to subserve national priorities and objectives such as rapid growth of agriculture, small industries and exports, raising of employment levels, encouragement of new entrepreneurs and development of backward areas. For this purpose it is necessary for the government to take direct responsibility for the extension and diversification of banking services and for the working of a substantial part of the banking system?” – (Bank Company Acquisition Act, 1969) Structural Change in India Look at state domestic product data for 16 main states of India over the period 1960-2000 – these 16 states account for over 95% of Indian population Real agricultural output per capita relatively flat over period – growth in agricultural output basically keeps track with growth in population Real non-agricultural output per capita begins to diverge from agricultural output around mid-1970s – but pattern highly varied across states Assam, Bihar, Jammu and Kashmir, Madhya Pradesh, Orissa, Rajasthan, Ut- tar Pradesh see limited structural change and economic growth – backward states – poor economic and social indicators Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Tamil Nadu, West Bengal – modern states – good economic and social indicators pattern even more marked when we look registered and unregistered manufacturing and services What accounts for different rates of structural change and economic growth in Indian states? Answer has important ramifications, for example, for poverty reduction Background Development Economics, LSE Summer School 2007 116 ...
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