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Reducing Poverty and Inequality in India: Has Liberalization Helped?


  • Jha, Raghbendra



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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  • Jha, Raghbendra, 2002. "Reducing Poverty and Inequality in India: Has Liberalization Helped?," Departmental Working Papers 2002-04, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2002-04

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    References listed on IDEAS

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    Cited by:

    1. 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," ASARC Working Papers 2001-05, The Australian National University, Australia South Asia Research Centre.
    2. Gaurav Datt & Martin Ravallion, 2002. "Is India's Economic Growth Leaving the Poor Behind?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 89-108, Summer.
    3. Gulati, Ashok & Fan, Shenggen & Dalafi, Sara, 2005. "The dragon and the elephant," DSGD discussion papers 22, International Food Policy Research Institute (IFPRI).
    4. Singh, Nirvikar, 2005. "The Idea of South Asia and the Role of the Middle Class," Santa Cruz Center for International Economics, Working Paper Series qt3868p628, Center for International Economics, UC Santa Cruz.
    5. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
    6. repec:hrs:journl:v:ix:y:2017:i:2:p:131-146 is not listed on IDEAS
    7. Bhattacharya, Haimanti & Innes, Robert, 2006. "Is There a Nexus between Poverty and Environment in Rural India?," 2006 Annual meeting, July 23-26, Long Beach, CA 21201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Tripathi, Sabyasachi, 2016. "Source of Inequality in consumption Expenditure in India: A Regression Based Inequality Decomposition Analysis," MPRA Paper 72117, University Library of Munich, Germany.
    9. Raghbendra Jha, 2001. "The Challenge of Fiscal Reform in India," ASARC Working Papers 2001-11, The Australian National University, Australia South Asia Research Centre.
    10. Raghbendra Jha, 2002. "Rural Poverty in India: Structure, determinants and suggestions for policy reform," ASARC Working Papers 2002-07, The Australian National University, Australia South Asia Research Centre.
    11. Baliamoune-Lutz, Mina & Lutz, Stefan H., 2004. "Rural-urban inequality in Africa: A panel study of the effects of trade liberalization and financial deepening," ZEI Working Papers B 06-2004, University of Bonn, ZEI - Center for European Integration Studies.
    12. Tripathi, Sabyasachi, 2015. "Do upcoming “Smart cities” need to provide smart distribution of higher urban economic growth? Evidence from Urban India," MPRA Paper 61527, University Library of Munich, Germany.
    13. Shashanka Bhide & Nidhi Dhamija, 2010. "Dynamics of Chronic Poverty: Variations in Factors Influencing Entry and Exit of the Chronic Poor," Working Papers id:2950, eSocialSciences.
    14. Ashwini Deshpande, 2007. "Overlapping Identities under Liberalization: Gender and Caste in India," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 735-760.
    15. Nachane, Dilip M., 2010. "Liberalization, globalization and the dynamics of democracy in India," LSE Research Online Documents on Economics 38356, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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