This paper investigates the association between night lights and GDP estimates for India at the district level. While many studies are finding a high degree of association between economic activity as measured through the Gross Domestic Product (GDP) and night lights internationally, there is a lack of understanding of whether and how night light data are correlated with economic activity at the sub-national level in emerging economies. This achieves more significance in economic monitoring and policy-making as estimates of GDP are not available at geographically disaggregated level, and even if available there is a large time lag involved before they are released. Stable light data obtained from night time images of 2008 captured by Defense Meteorological Satellite Program-Operational Linescan System (DMSP-OLS) satellite are used in the study. The data records artificial lights from human habitations from the earth surface and is a surrogate of the level of development of an area. The data on GDP at the district level for the year 2008 have been sourced from Indicus Analytics that has used data from government sources and a method of estimation suggested by the Central Statistical Office of the Government of India. Using multinomial non-linear regression techniques the paper finds that indeed GDP at the district level is significantly explained by night lights in the area. It also finds that the non-linearity is much stronger for metropolitan cities where GDP levels are far higher than a linear model can explain. Conversely, in areas where agriculture and forestry activities are higher, the use of night lights in a linear model overestimates the GDP.

There are concerns that regional inequality in India has increased after the economic reforms of 1991. This concern is supported by various statistical analyses. In this paper, we show that the conclusions are sensitive to what measures of attainment are used. In particular, human development indices do not show the same increase in regional inequality. Furthermore, looking at consumption and credit indicators for regions disaggregated below the state level also suggests that inequality trends may not be as bad as suggested by State Domestic Product data, although the greater strength of the economies of the western and southern states emerges in our results. Finally, we briefly discuss policy implications within the context of India's evolving federal polity.JEL Classification: D63, H73, O10, O53 Key Words: regional inequality, federalism, human development † We are grateful to the Santa Cruz Center for International Economics for financial support. We alone are responsible for the views expressed here.

Several studies have been carried out relating nighttime lights with economic activity. But most studies relating nighttime lights with economic activity have focused on associating higher totals in economic activity with higher sum of lights across regions. The question addressed in this paper is how best to model the relationship of nighttime lights with not just the wealthy but also the relatively worse-off within a region. The implications of such an exercise are immense with respect to ascertaining income distribution aspects of any area. The methods developed in this paper explore the relation between households in different income brackets at the district level for India, and the radiance-calibrated nighttime image of 2004. Besides the radiance-calibrated data of 2004, estimates of household incomes and number of households in different income brackets, made by Indicus Analytics (specialized economic research firm, based in New Delhi, India) were used. The results were mapped and insights were drawn for all districts based on their socioeconomic profile. These results illustrate the advantage of using this easily available data for determining income inequalities, especially in information-deficient countries such as India.

in the post-reform period. This paper uses sub-state-level (regional) data to study economic growth in the post-reform period. Using the latest available data (for the late nineties) at the sub-state level we find that a very clear break is observable between the eastern and western parts of India. That is, the western part of India has had an increase in its share in the economy as against the eastern part which has lost out during this period. Unlike others, this study covers all the 78 regions in 35 states of India. The smaller states that are generally left out in state-level studies are covered here. This allows us to generate a comprehensive picture of the geographical profile of India and how it is changing. We find some evidence that regions that have a predominantly natural resource-based economy are not growing as fast. We also find some evidence that regions that contain important river systems have not performed as well. Other issues are identified as well. This study finds that much more work is required and is possible with available data. It concludes by identifying a

In many countries, Development Financial Institutions (DFIs) have been major conduits for channelling funds to particular firms, industries and sectors during the latter's process of development. In India, DFIs have been a more important source of long-term funds (mainly debt) for industry than bank loans or other sources of debt. Using data from the Indian corporate sector, we evaluate the role of DFIs in India for the period 1989-97 by examining how firms' investment decisions are affected by their ability to access DFIs. We find that firms that had prior access to DFIs continue to receive funds from these sources only if they can be classified as a priori more financially constrained. Access to DFIs for funds spurs investment. These results suggest that DFI lending is not governed by considerations of lobbying, precedence or even to sponsor particular types of projects that might be socially desirable but not privately profitable. Rather, the primary role of DFIs has been to reduce financial constraints faced by firms. We also find that the drastic contraction of long-term bank lending to industry in India in the early nineties had adverse consequences for firms that were particularly bank-dependent, but only if these firms could be classified as a priori more financially constrained. Together, these results support the view that in contrast to firms in well-developed capital markets, in emerging markets, firms with growth potential are likely to rely significantly on debt financing, especially debt that is channelled through financial inter mediaries.

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