Inclusive Growth and Income Inequality in India: Causes, Consequences and Policy Responses

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Inclusive Growth and Income Inequality in
IndiaCauses, Consequences and Policy
Responses 

• Amitabh Kundu and Niranjan Sarangi
• POLICY DIALOGUES ON INEQUALITY
• UNDP Regional Centre in Colombo
• December 05-07, 2008

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Research Questions

• Are regional disparities very high? Alarming? Are
  these increasing overtime?
• Are social inequalities very high? Growing?
• Are state initiatives effective in inequality
  reduction?
• Is migration/urbanisation an instrument in
  reduction of regional inequality and poverty?
• What is the current policy thrust of the
  government?

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Disparity in Per Capita GSDP Weighted and
Unweighted Indices
Note The values for 199394, 199697 and
19992000 are based on 199394 series while those
for 200102 are based on 19992000 Series at
current prices. The weighted CV for the year
2004-05 is computed using the values of all the
states except Goa (which is an outlier),
comparable with the estimates for the years from
2001-02 onwards, is given as estimate (a). The
estimate (b) is based on the values of 14 states
comparable with those of the years upto 1999-00.
Similarly, the unweighted CV for the year 2004-05
is computed using the values of all the states
except Goa (a) and only 14 states (b).
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Per capita consumption expenditure in different
social groups in various settlement categories
at current prices
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Growth rate (Annual) of monthly per capita
consumption expenditure in different social
groups and settlement categories
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Figure 1 Probability of being Poor by Migration
Status Across Size Class of Towns

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Ratio of per capita consumption expenditure in
different social groups to average expenditure
in various settlement categories

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Figure 2 Probability of being Poor by Migration
Status Across Levels of Education
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Internal migrants in various categories 1961-2001
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Migration Rate for Rural and Urban Males in
Different MPCE Classes (1999-2000)
Source NSS report No. 470 Migration in India,
1999-2000.
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Select Indicators of Economic Development, State
Interventions and Social Development with their
Averages and Coefficients of variation
(contd...)
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Contd.
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Policy Perspectives

• Intra-state inequality and concentration of
  poverty in pockets necessitates a thrust in
  policy from states to backward regions.
• Flagship programmes are either self-targeting or
  pro-backward region, but not reducing inequality
  in growth.
• Increasing central sector projects are bypassing
  states to target backward districts.
• Emphasis on district planning strengthening
  grassroot organisation and greater flexibility
  for resource use at local level.

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Policy Perspectives

• Capacity creation at local level, providing
  access to credit, health, education, skills and
  access to governance would ensure equity in
  development without adversely affecting growth.
• Given an appropriate strategy for decentralised
  governance, backed up by institutional support,
  may alleviate the conflict between inequality and
  growth.