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Reducing Poverty in India The Role of Economic Growth

Author

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  • Pradeep Agrawal

    (Institute of Economic Growth, Delhi)

Abstract

This paper empirically examines the relation between economic growth and poverty alleviation for the case of India. We provide evidence that higher growth rates were associated with faster decline in poverty, partly because growth helped increase employment and real wages which contributed to poverty reduction. The increase in government social expenditure is also shown to have contributed significantly to poverty alleviation. However, we also find that higher GDP growth increased government revenues, which enabled the government to increase expenditure on the social sectors. Overall, this evidence suggests that for rapid reduction in poverty, sustaining high growth is the most crucial element.

Suggested Citation

  • Pradeep Agrawal, 2015. "Reducing Poverty in India The Role of Economic Growth," IEG Working Papers 349, Institute of Economic Growth.
    • Handle: RePEc:awe:wpaper:349
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    References listed on IDEAS

    as
    1. Hans Binswanger & Shahidur Khandker, 1995. "The impact of formal finance on the rural economy of India," Journal of Development Studies, Taylor & Francis Journals, vol. 32(2), pages 234-262.
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    7. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," The World Bank Economic Review, World Bank, vol. 10(1), pages 1-25, January.
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    More about this item

    Keywords

    Growth; poverty; inequality; education expenditure; health expenditure; social assistance; India;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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