ECONOMIC GROWTH

Does Economic Growth have an impact on poverty in India?

Does Economic Growth have an impact on poverty in India?

CHAPTER 2: LITERATURE REVIEW

Economic growth in any country is inversely related to the level of poverty that country is subjected to. This is a general perspective but it might not be true for all the countries across the globe. The factors due to which this might not be the case for each country are not quite known but to precisely understand whether or not Economic Growth produces an impact on Poverty and to what extent the impact is registered, this research has been undertaken. The sample country that is used to facilitate this study is India, which is predominantly a developing country and hence, the correlation between the two variables and impact will be more accurately gauged.

Distribution of Poverty Alleviation

Last few decades have seen India as making systematic efforts towards economic growth among other major reforms and strategies so as to induce decline in the poverty level of the country. From the period of 1973-1974 to the period of 1999-2000, continuous decline in the poverty level is apparent; which was predominantly calculated through assessing the incidence as ratio of population below poverty line. Looking at the statistics of 1980's, significant decline in the percentage of poverty struck people is evident, however the rate of poverty alleviation reduced considerably in the early 90's (Bhattacharya and Sakthivel, 2004, pp. 1074). Though second half of the last decade of 20th century effectively points towards 10% poverty drop, the accuracy of these figures could be challenged as varying methodologies and data collection methods have been used to gather and analyse data.

Furthermore, it is also seen that the rate of poverty varies with differing states of India, which can be attributed to the significantly varying concentration of each state across India. Around one-third of the populace occupies only three states out of the total 28 states and seven union territories comprising India. Furthermore, another three states account for a substantial 22.5% of the population subjected to poverty. Thus, out of 72% of the people who live below poverty line, half of the population resides in Uttar Pradesh, Madhya Pradesh, Maharashtra, West Bengal, Bihar and Orissa.

Chronic poverty has not been focused by researchers as much as it should have been to effectively understand more precisely the impact of economic growth, to which tens of millions of families are subjected to. The research study conducted in 2002 which was focused on exploring chronic poverty in India; its incidence, causes associated and policies targeted to tackle it resulted in the findings that people living in forest-based economies are greatly subjected to chronic poverty than those living in other states (Dollar and Kraay, 2002). Although, reduction concerning incidence of income poverty is achieved through public as well as private interventions, millions continue to remain strangled in poverty.

The paper has further drawn upon the demographics pertaining to major proportion of the poverty struck, but it is beyond the ...