This article attempts to understand and theorize the issue of persistent regional disparity within democratic structures using an institutional perspective. Institutional economists widely acknowledge the role of democratic institutions in improving redistribution and reducing inequalities. However, persistent regional disparity within democratic nations has become a cause of concern for both developed and developing nations. There is hardly any study that either attempts to develop a separate institutional framework to explain regional variation or to examine the applicability of these frameworks in the regional context. Our article is an attempt to fill this gap. In this article, we have taken the case of Odisha, a low-income state within the largest democracy in the world, India, and tried to theorize its wide and persistent regional disparities. The novelty of this article is conceptualizing the interactions between formal and informal institutions and drawing implications of their interactions for regional disparity and economic growth.
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