Regional Inequality and 'Inclusive Growth' in India under Globalization: Identification of lagging states for strategic intervention | Economic Inequality | Gini Coefficient

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India has experienced a positive growth in development. With rates of employment, poverty reduction, positive demographic shifts and economic growth all high, India's natural growth rate in population and fertility varies between the Northern and Southern States. Through statistical data represented in charts and graphs, this working paper analyses the trends and patterns of economic inequality across India's States since the early 1990s and demonstrates the dynamics of growth resulting in regional imbalances by identifying which States are being excluded. It also proposes measures for alleviating deficiencies in the macro economic growth strategy (or the special programmes launched as a part of the policy of inclusive growth) and suggests how these can be remedied.
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  Oxfam India working   papers series September 2010OIWPS - VI  Amitabh Kundu K. Varghese Essential Services Regional Inequality and ‘Inclusive Growth’ in India under Globalization: Identification o f   Lagging States f  or Strategic Intervention  The present paper analyses the trends and patterns of economic inequality across Indian states since the early 1990s. The basic objective here is to understand the dynamics of growth in the country which is resulting in regional imbalances and propose measures for alleviating the problem. The inter-state inequality in per capita income and consumption expenditure show a clear increasing trend during the fi rst and second phase of structural reform. However, the strategy of inclusive growth and balanced regional development launched since 2003-04, has led to acceleration in the average growth in the less developed states, including those in the North-East. Unfortunately, however, this has made only a marginal impact in stalling the trend towards accentuation of regional imbalances. Further, poverty reduction has been relatively less in less developed compared to developed states, resulting in concentration of poverty in a few backward states. The composite indices of economic development, constructed based on a select set of indicators exhibit high correlations with that of social development. This is understandable as the capacity of the governments at the state level to make interventions and bring about social transformations is high in relatively developed states. The correlation of economic development with amenities, although statistically signi fi cant, is relatively low, which suggests that the problems pertaining to health, education, and access to other amenities cannot be effectively addressed  just by focusing on economic development. Abstract Disclaimer: Oxfam India Working Paper Series disseminates the fi nding of the work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the fi ndings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The fi ndings, interpretations, and conclusion expressed in this paper are entirely those of the authors. They do not necessarily represent the views of Oxfam India. Produced by:   Oxfam India  For more information, please contact:  Avinash Kumar  Theme Lead - Essential ServicesOxfam IndiaPlot No. 1, Community Centre2nd Floor (Above Sujan Mahinder Hospital)New Friends Colony, New Delhi - 110 025Tel: 91 11 4653 8000Website: www.oxfamindia.org  Authors:  Amitabh Kundu and K. Varghese  Amitabh Kundu teaches at Jawaharlal Nehru University, New Delhi. He has been a member of the National Statistical Commission, Government of India and Dean of the School of Social Sciences at JNU. He has been Visiting Professor at Sciences Po, University of Amsterdam, University of Kaiserslautern, among others. He has been Director at the National Institute of Development Research. He has edited India: Urban Poverty Report and India: Social Development . He has prepared background papers on India’s Economic Growth and Inequality for OECD and Human Development Report 2009 . Currently, he is chairperson of the Technical  Advisory Committee on Housing Start up Index at RBI and Committee to Estimate Shortage of Affordable Housing, Government of India. Email: amit0304@mail.jnu. ac.inK. Varghese  is working as a Systems Analyst at the Centre for the Study of Regional Development, Jawaharlal Nehru University, New Delhi. A Post Graduate in Statistics, he has a number of professional certi fi cates in software applications. He is teaching Quantitative Techniques to student of MA Geography and conducts training programmes and laboratory practicals on database management and statistical techniques, computer cartography, GIS and Remote Sensing. Email:  varghese@mail.jnu.ac.in Study Supported by Oxfam India in collaboration with Institute for Human Development, New Delhi Copyright @ 2010 Oxfam IndiaReproduction of this publication for educational or other non-commercial purposes is authorized, without prior written permission, provided the source is fully acknowledged.    1. Introduction The Indian development scenario looks optimistic, not only in terms of the pace of economic growth but also in its capability to stand out in periods of global economic crises. In the context of growth in employment, too, the economy has done reasonably well over the past decade, allaying fears of jobless growth, the key concern that emerged in the late 1990s. The growth rates, as per all three alternate definitions of employment adopted by National Sample Survey Organization, namely usual status, weekly status, and daily status, have been exceptionally high since the early years of the present decade. The impact of growth in poverty reduction, too, has been significant, although the estimated elasticity of poverty reduction has been lower than several countries in the South  Asian region (Devarajan and Nabi: 2006). The high growth in employment can partly be attributed to demographic dividend the country is currently enjoying due to decline in the natural growth rate in population. Many of the states, particularly in southern India, like Kerala and Tamil Nadu have experienced fertility decline over the past couple of decades, making the Net Reproduction Rate equal to or less than unity. The growth of population in several other states, especially in north and central India has, however, been high, reporting either no decline, or in some cases, even an increase, in recent years, which is a cause for concern. However, as a result of general reduction in fertility, the percentage of adults in the age group 20–35 is expected to grow rapidly over the next few decades. This would help these states to pick up their growth momentum, provided the incremental adult population can be meaningfully absorbed in productive sectors. In the absence of such employment opportunities, a north-south transfer of adult population on a massive scale would have to be considered, which has serious societal implications. Such transfers may indeed be difficult due to the emerging socio-political scenario in the country, which would put enormous pressure on land and infrastructure in many less developed states.
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