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Reducing Poverty and Inequality in India: Has Liberalization Helped?

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Jha, Raghbendra ()

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Abstract

This study examines the empirical relationship among inequality, poverty and economic growth in India. Using data on consumption from the 13th to the 55th Rounds of the National Sample Survey, the author computes, for both rural and urban sectors, the Gini coefficient and three popular measures of poverty. The observed changes in inequality and poverty are explained in terms of the behaviour of key macroeconomic aggregates. A sharp rise in rural and, particularly, urban inequality and only a marginal decline in poverty have characterized the post-reform period. The rise in inequality is explained in terms of an increase in the relative share of output going to capital as compared to labour, a drop in the rate of labour absorption and the rapid growth of the services sector. The rise in inequality has diminished the poverty-reducing effects of higher growth. The reforms have also been characterized by widening regional inequality. This is especially true in the case of the incidence of rural poverty, but also, to a lesser extent, urban poverty. Statistical convergence among states in terms of inequality, poverty and real mean consumption is weak. Several policy conclusions are advanced.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2002-04.

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Length: 65 pages
Date of creation: 2002
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Handle: RePEc:pas:papers:2002-04

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  1. Boadway, Robin & Horiba, Isao & Jha, Raghbendra, 1999. " The Provision of Public Services by Government Funded Decentralized Agencies," Public Choice, Springer, vol. 100(3-4), pages 157-84, September. [Downloadable!] (restricted)
  2. Deaton, A. & Paxson, C., 1997. "Economies of Scale, Household Size, and the Demand for Food," Papers 178, Princeton, Woodrow Wilson School - Development Studies.
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  3. Villasenor, JoseA. & Arnold, Barry C., 1989. "Elliptical Lorenz curves," Journal of Econometrics, Elsevier, vol. 40(2), pages 327-338, February. [Downloadable!] (restricted)
  4. Ferreira, Francisco & Prennushi, Giovanna & Ravallion, Martin, 1999. "Protecting the poor from macroeconomic shocks," Policy Research Working Paper Series 2160, The World Bank. [Downloadable!]
  5. Ravallion, Martin, 1998. "Does aggregation hide the harmful effects of inequality on growth?," Economics Letters, Elsevier, vol. 61(1), pages 73-77, October. [Downloadable!] (restricted)
  6. Howes, Stephen & Lanjouw, Jean Olson, 1998. "Does Sample Design Matter for Poverty Rate Comparisons?," Review of Income and Wealth, Blackwell Publishing, vol. 44(1), pages 99-109, March.
  7. Mundle, S. & Tulasidhar, V.B., 1998. "Adjustment and Distribution: The Indian Experience," Papers 17, Asian Development Bank.
  8. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, Oxford University Press, vol. 10(1), pages 1-25, January.
  9. Charles I. Jones, . "Convergence Revisited," Working Papers 96006, Stanford University, Department of Economics. [Downloadable!]
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  10. Torsten Persson & Guido Tabellini, 1991. "Is Inequality Harmful for Growth? Theory and Evidence," NBER Working Papers 3599, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Lipton, Michael & Ravallion, Martin, 1993. "Poverty and policy," Policy Research Working Paper Series 1130, The World Bank. [Downloadable!]
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    • Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier. [Downloadable!] (restricted)
  12. Evans, Paul & Karras, Georgios, 1996. "Convergence revisited," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 249-265, April. [Downloadable!] (restricted)
  13. Subramanian, Shankar & Deaton, Angus, 1996. "The Demand for Food and Calories," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 133-62, February. [Downloadable!] (restricted)
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  14. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, vol. 65(257), pages 17-38, February. [Downloadable!] (restricted)
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  15. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March. [Downloadable!] (restricted)
  16. repec:fth:coluec:625 is not listed on IDEAS
  17. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
  18. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank. [Downloadable!]
  19. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Datt, Gaurav & Ravallion, Martin, 2002. "Is India's economic growth leaving the poor behind?," Policy Research Working Paper Series 2846, The World Bank. [Downloadable!]
    Other versions:
  2. Raghbendra Jha, 2001. "The Challenge of Fiscal Reform in India," ASARC Working Papers 2001-11, Australian National University, Australia South Asia Research Centre. [Downloadable!]
  3. Raghbendra Jha & Bagala Biswal & Urvashi D. Biswal, 2001. "An Empirical Analysis of the Impact of Public Expenditures on Education and Health on Poverty in Indian States," Working Papers 998, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  4. Singh, Nirvikar, 2005. "The idea of South Asia and the role of the middle class," MPRA Paper 1277, University Library of Munich, Germany. [Downloadable!]
  5. Raghbendra Jha, 2002. "Rural Poverty in India: Structure, determinants and suggestions for policy reform," ASARC Working Papers 2002-07, Australian National University, Australia South Asia Research Centre. [Downloadable!]
  6. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA). [Downloadable!]
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