Increasing economic disparities among both people and regions are always an issue of great concern. Reducing
regional economic disparity and ensuring balanced development is crucial in maintaining political stability of countries
with federal polity. The findings of studies concerning regional disparities are thus essential in the promotion of
balanced regional development. A study of this kind assumes special significance for India as the sustainability of
growth momentum of one of the fast growing economies of the world relies on the political stability of Indian federal
polity. The research outcome of regional disparity analysis is, however, often ambiguous and is not robust to choice
of strategies, namely â and ó convergence analysis. The regression based theoretically appealing â convergence
approach has not given adequate attention to spatial effects. This study estimated parameters of Bayesian Spatial
Durbin Model using state wise real per capita Gross State Domestic Product (GSDP) data computed from Central
Statistical Organization (CSO) during the period 1980 – 2010. The study concludes that the later reform period has
witnessed beta convergence due to feedback effect. The debate of convergence of â in Indian scenario is explained
using inclusion of spatial effects in this study.