Liberalisation and it’s effect on inequality in developing countries-A case study on India

There are both positive and negative aspects to liberalisation policies. Liberalisation policies are no less important than any other kind of economic policies, and so it can only be healthy that what was formerly an obscure and technocratic process has moved to centre-stage politically. What’s more, economic development and the alleviation of poverty are now key political priorities in further liberalisation. Hence in order to check for the effectiveness of liberalisation policies in developing countries it is important to measure it from the point of view of how it has reduced levels of inequality. If liberalisation has so far had no impact on inequality within countries, for good or bad, it has become received wisdom that inequality between countries has increased. Yet the overall pattern is less easy to sum up. Within different country groups there have been varying patterns of either increasing or decreasing inequality. Hence a case study is done on India and with the help of convergence hypothesis using log linear and linear regression techniques divergence is proved.Liberalisation since 1991 has had no major impact on reducing the level of inequality between Indian states.