Advertisement

“Inclusive Growth” and Income Inequality in India Under Globalization: Causes, Consequences and Policy Responses

  • Amitabh Kundu
Chapter
Part of the India Studies in Business and Economics book series (ISBE)

Abstract

In the eighth chapter, the author provides an overview of the factors responsible for India’s spatial structure of growth and development. He argues that growth so far has not translated into development and one of its manifestations is high regional imbalance. The author takes up multiple parameters like income, consumption, poverty, employment, urbanization and migration for the last two decades at the state level and shows that in the post-globalization phase, there has been a rise in economic inequality. Considering the disparity across size, class and urban centres, he argues that per capita consumption expenditure in metropolitan cities has increased at a significantly higher rate compared to other urban areas. Such increasing inequality is primarily because many of these metropolitan cities have got directly linked to the global market in recent years. Surprisingly, mobility among the Indian population has gone down, particularly towards large metropolitan cities. He has attributed such a reverse trend to growing regionalism, and assertion of regional identity, change in skill requirement in the urban labour market, ­land-use restrictions at the city level, inhospitable attitude towards migrants, etc. With the growing impact of global economy, migration to cities has become selective as a substantial number of migrants are now from the middle income group. Declining mobility among the poor would make poverty levels in backward states persistently high, as migration, he argues, is a definite instrument of improving economic well being and escaping poverty. He then extensively discusses the institutions and programmes that are instrumental for balanced regional development in India and thinks that programmes for structural reforms in early 1990s have led to further concentration of public and private investments in developed regions, guided by the consideration of economic efficiency. Importantly, India has gradually made a distinct shift in its regional development strategy, giving thrust to vulnerable districts, blocks and settlements within the framework of decentralisation. Since 2004–05, there is a paradigm shift, as many of the backward states including those in the Northeast, have recorded significant acceleration in their growth, whereby the inter-state disparity in the growth rate of State Domestic Product or in per capita SDP has shown some stability. Unfortunately, this pattern of growth has not been sustained in recent years with many of the backward states showing deceleration in growth, and income inequality increasing again. The author thinks that research and policy discussion on the factors responsible for such regional disparity in India is inconclusive and inadequate. Given the planning apparatus in the country which is essentially centralized, there has not been a big demand for empirical studies to restructure the policies and programmes at the state and lower levels. Therefore at the level of policy formulation process, such gaps need to be filled up to ensure unbiased outcome and then to enhance greater socio-economic equity, which alone can guarantee faster growth in the long run.

Keywords

Consumption Expenditure Planning Commission Regional Inequality National Sample Survey Regional Imbalance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Ahluwalia, M. S. 2000. Economic performance of states in post reform era. Economic and Political Weekly 35 (19): 1637–1649.Google Scholar
  2. Ahmad, Ahsan, and Ashish Narain. 2008. Towards understanding development in lagging regions of India. Paper Presented at the conference on Growth and Development in the Lagging Regions of India, Administrative Staff College of India, Hyderabad.Google Scholar
  3. Bhattacharya, B. B., and S. Sakthivel. 2004. Regional growth and disparity in India: Comparison of pre- and post-reform decades. Economic and Political Weekly March 6: 1072–1077.Google Scholar
  4. Devarajan, S., and I. Nabi. 2006. Economic growth in South Asia. Washington, D.C.: World Bank (South Asia Region).Google Scholar
  5. Kanbur, R., and Anthony J. Venables. 2007. Spatial disparities and economic development. In Global Inequality, eds. D. Held and A. Kaya. Cambridge: Polity Press.Google Scholar
  6. Kundu, A. 2006. Globalization and the emerging urban structure: Regional inequality and population mobility. In India: Social development report, ed. A. Kundu.. New Delhi: Oxford University Press.Google Scholar
  7. Kundu, A. 2011a. Politics and economics of urban growth. Economic and Political Weekly, May.Google Scholar
  8. Kundu, A. 2011b. Method in madness: Urban data from 2011 census. Economic and Political Weekly, October.Google Scholar
  9. Kundu, A. 2014. Urbanisation and its exlusionary development. In Urban growth in emerging economies: lessons from BRICS, ed. G. McGranahan and G. Martine. New York: Taylor and Francis.Google Scholar
  10. Kundu, A., P. C. Mohanan, and K. Varghese. 2013. Spatial and social inequalities in human development: India in the global context. New Delhi: United Nations Development Programme. Employment and inequality outcomes in India. New Delhi: Jawaharlal Nehru University/Indian Statistical Service. http://www.oecd.org/els/emp/42546020.pdf. Accessed 9 Dec 2013.Google Scholar
  11. Kundu, A., and N. Sarangi. 2007. Migration, employment status and poverty: An analysis across urban centres in India. Economic and Political Weekly XLII (4): 299–306.Google Scholar
  12. Kundu, A., and Lopamudra Ray Saraswati. 2012. Migration and exclusionary urbanisation in India. Economic and Political Weekly XLVII (26–27): 212–227.Google Scholar
  13. Mathur, Ashok. 2006. Regional development disparities and economic reforms in India. In Economic Reform and Development, ed. Dhindsa, K. S. and Anju, Sharma. New Delhi: Concept Publishing Company.Google Scholar
  14. Nayyar, D. 2006. Economic growth in independent India: Lumbering elephant or running tiger? Economic and Political Weekly 41 (15): 1451–1458.Google Scholar
  15. Panagariya, Arvind. 2008. India: The emerging giant. New Delhi: Oxford University Press.Google Scholar
  16. Planning Commission. 2003. Report of the taskforce for identification of districts for wage and self employment programmes. New Delhi: Government of India.Google Scholar
  17. Planning Commission. 2005. Report of the inter-ministry task group on redressing growing regional imbalances. New Delhi: Government of India.Google Scholar
  18. Planning Commission. 2008. Eleventh five year plan 2007–2012, Vol. I. New Delhi: Government of India.Google Scholar
  19. Planning Commission. 2008. Manuel for Integrated District Planning. New Delhi: Government of India.Google Scholar
  20. Planning Commission. 2009. Report of expert group to review the methodology for vestimation of poverty. New Delhi: Government of India.Google Scholar
  21. Sen, A. 2000. Estimates of consumer expenditure and its distribution: Statistical priorities after NSS 55th round. Economic and Political Weekly 35: 4499–4518.Google Scholar
  22. Sviekauskas, L. 1975. The productivity of cities. Quarterly Journal of Economics 89: 393–413.CrossRefGoogle Scholar
  23. Winters, L. Alan, and Shahid Yusuf, eds. 2007. Dancing with giants: India, China and the global economy. Singapore: The World Bank and the Institute of Policy Studies.Google Scholar
  24. World Bank. 2005. World Develoment Report 2006: Equity and Development. Washington: World Bank.Google Scholar

Copyright information

© Rajiv Gandhi Institute for Contemporary Studies 2015

Authors and Affiliations

  1. 1.Senior Fellow, Delhi Policy Group, India Habitat CentreLodhi Road, New DelhiIndia

Personalised recommendations