Growth and Poverty –Issues, Myth and Challenges

In more than half century since its Independence, India has accomplished many notable social and economic achievements. Among these are the eradication of widespread famine, a reduction in population growth, some lowering of caste barriers to economic opportunity and the creation of a large pool of technical and scientific talent. While it has also managed to reduce poverty in that period, only since 1975, when growth accelerated, has the decline been fairly steady. India's progress in fighting poverty has been modest when compared with some of its Asian neighbours. Between 1970 and 1993, for example, the proportion of Indonesia's population living in poverty dropped from 58 to 8 percent, an annual decline of nearly 10 percent. India's poverty continues to be predominantly rural although rural poverty declined faster than urban poverty. Moreover, the decline in national poverty seems to have been driven mostly by the decline in rural poverty. The real issue in establishing a development strategy is whether growth and distribution are independent of each other or, strongly inter-related. Is it the case for instance that faster growth tends to reduce inequality or on the contrary, to increase it? Could too much inequality in a given country act to slow down or, to accelerate growth? All these questions have concerned economists in the last decades and probably will keep doing so for the years to come. Therefore, while preparing a development strategy for our nation, the main issue before the economists is whether to focus on increasing growth or by reducing poverty or by removing inequality or removing unemployment.