Poverty, growth, inequality: some general and India-specific considerations

This paper aims to address the thesis that poverty is best alleviated by a policy emphasising the growth of per capita average income, a strategy that affords little room for direct pro-poor interventions or a movement towards a more equal distribution of incomes. This policy prescription is based on the empirical finding that cross-country variations in poverty are largely explained by variations in growth rates of average income.

The paper contends, as has been done in other commentaries on the subject, that inferring the dictum that “growth is [virtually the only thing] good for poverty” from cross-country evidence on poverty, growth and inequality is neither logically plausible nor normatively compelling. This is sought to be established both through conceptual reasoning and (secondary) data-based analysis. In particular, the thesis under review implicitly rejects the value of counter-factual analysis. Such a hypothetical illustrative analysis is attempted here, using evidence relating to urban poverty, growth and inequality in India.

The paper concludes, without undermining the salience of growth, that there is little basis for the pre-eminence accorded to it as the instrument for poverty redress.

This paper has not been published elsewhere. A collaborative paper by one of the present authors with another scholar, on a similar theme is, however, under preparation for publication.