Poverty and Inequality in India : An Exploratory Analysis

Abstract

India is a country characterized by multi-layered diversity and cultural heterogeneity where different types of inequalities and poverty have always been a fact of life. Since independence in 1947, she followed a development policy based on interventionist central planning and import substitution with the objective of reducing inequality and poverty. Policymakers adopted a middle path in which income inequality was tolerated, provided it was not 'excessive' and led to a higher rate of growth. From the mid-1980s, the Indian government gradually adopted market-oriented economic reforms. The pace accelerated during the early 1990s with the adoption of neo-liberal reforms programmes, marking a period of intensive economic liberalization. The focus changed from state intervention for more equitable distribution towards liberalization, privatization and globalization. During the past two decades, India has made rapid economic progress resulting in an expanding middle class with unprecedented access to goods and opportunities. Yet, it is not only that the new income generated by economic growth has been very unequally shared, but also the resources newly created have been inadequately utilized to alleviate the enormous social and economic deprivation of a majority of the society. This paper analyses the nature and causes of inequality and poverty in India.