Economic Growth In Rural India Essay

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The poverty estimates for 2009-10 using the earlier Lakdawala method is 24.2% in rural India and 23.5% in urban India including the free meals, and 26.1% in rural India and 24% in urban India excluding the free meals. This show a much smaller reduction from the corresponding 2004-05 estimates. The poverty estimates at the international poverty lines using PPP ($1.25 and $2 a day) also emphasize the decline in poverty. So we can state that poverty has declined in between 2004-05 and 2009-10 but to what extent is economic growth responsible for this reduction in poverty? Is it growth alone or a combination of growth and redistribution policies?

It is general understanding that higher growth rates tend to yield more rapid absolute poverty reduction as for any given poverty line, any measure of absolute poverty will be a strictly decreasing function of the mean income on a constant Lorenz curve. On a constant Lorenz curve, the consumption of all strata changes by the same proportion, and so the poor are better off when the mean increases. It is often assumed in …show more content…

Inequality needs to be addressed considering the various dimensions associated with it such as gender, caste, access to key social services etc. consumption or income are not sufficient variables in analyzing the issue of inequality. Higher rate of poverty reduction can be achieved only when the emphasis is shifted from economic growth. The reason why inequalities persist even with economic growth is because there has not been given appropriate attention to redistributive policies. Redistributive policies in the early phase of growth can achieve higher level of poverty reduction for the same rate of growth. Schemes like PDS and MDM contribute significantly to poverty

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