Per capita GDP of brighter states is larger than that of the poorer states
As states grow economically, the gap between the rich and poor districts within the state widens, as observed in night lights data from 1991 to 2015.
BBC did a story on 27 May titled ‘Inequality in India can be seen from outer space’ based on my joint research work with Professor Vivek Dehejia. The story was about our research that used data from night-time images of India, captured by the United States Air Force satellites orbiting the earth, to demonstrate that India is experiencing significant economic divergence among its states and districts.
We were inundated with emails, calls, text messages either acknowledging the story or, more often, asking questions about our research work. The story was also widely shared in social media circles. There seems to be some confusion and misinterpretation on the objective, methodology and findings of our research work. This is an attempt to help explain our research in simple terms.
Studying night lights data
The US Air Force (USAF) Defense Meteorological Satellite Program (DMSP) operates a series of satellites, which carry very sensitive light sensors that detect light emission from the earth surface at night. The digital data from DMSP since 1992 are archived and made available to research scholars. It is well established in economic research that such night-time lights are a good proxy for economic development. This data does not measure economic activity that happens during the night, as many seem to have interpreted. This is in line with the larger idea that electrification is a good indicator of development and economic prosperity of a region. Of course, cities will always be brighter than rural areas but cities also generate more economic output than rural areas, as measured by GDP. Hence, the correlation.
We obtained night lights data for India from 1992 to 2015 for 640 districts (as per Census 2001 boundaries) and 543 Lok Sabha constituencies. We first established that it is indeed true that night lights correlate strongly with economic development, even in the Indian context.
Brighter states, larger GDP
We found that as per capita GDP of a state grew from 1992 to 2015, so did its night lights luminosity during the same time period. We found an 80 per cent correlation between the two. To be sure, this does not mean we can estimate GDP using night lights data.
Needless to say, there was wide disparity among various states, with Tamil Nadu, Kerala and Maharashtra among the brightest and Bihar, Uttar Pradesh and Odisha among the darkest at night. This is also consistent with the fact that per capita GDP of the brighter states is three times larger than the per capita income of the poorer states.
GDP data for various states of India are well captured and made available. But GDP data for districts within each state are not as easily available and reliable. So, we decided to use night lights as a proxy for district-level economic development within each state. Not surprisingly, we found massive variation in luminosity levels across these districts, in line with their income disparity. Roughly, urban cities of Mumbai, Bengaluru, Chennai, Delhi, Hyderabad and Kolkata account for 90 per cent of all night-time brightness in India, as observed from outer space.
This disparity across districts transcends down. If we remove the big cities, then we find the top 30 districts account for 80 per cent of all of India’s brightness at night while the remaining 600 districts, combined, account for a mere 20 per cent of the brightness. So, it is likely that income disparity among districts within each state is also very high since disparity in night-time brightness among districts is very high.
The widening gap
But what is more striking from the data is that this disparity across various districts is only widening, and not narrowing. Put simply, as states grow economically, the gap between the rich and poor districts within the state widens, as observed in our night lights data from 1991 to 2015.
To be clear, this does not mean that the poorer districts within a state are not growing richer. Every district is growing richer and brighter. But the richer districts and cities are growing faster than the poorer districts and hence, this gap is widening. This is the main thrust of our research finding – that the income gap across states and districts within each state is widening over time and not narrowing, as observed in other nations in the world.
Inequality is not a unique Indian phenomenon. It is also not a unique finding. But, what our research establishes is that the levels of disparity among India’s states and districts within each state is the highest of all large federal economies in the world. We also show using this research that lazy explanations for this disparity, such as ‘quality of governance’, does not fully explain it.
If quality of governance is the reason for income disparity between say Bihar and Tamil Nadu, then what explains the wide disparity among various districts within Bihar or within Tamil Nadu, where presumably the quality of governance is the same across the state? It is also clear that as we grow richer, this inequality widens. In which case, it is only logical to ask – is it something about the nature of contemporary economic development that makes inequality an inevitable outcome?
Published on 01 June, 2018 in The Print