India: Is the Rising Tide Lifting All Boats?
IMF Working Papers, March 1, 2008
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Bibliographic details
- Authors: Petia Topalova
- Published: March 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451869163.001
Summary
- While many have celebrated India's accelerating economic growth, some have expressed concern about the distributional impacts of the growth process.
- Cognizant of the vulnerability of its large population below poverty, India's authorities have made faster and more inclusive economic growth the primary goal of their development strategy.
- This paper aims to document how the benefits of economic expansion were shared across the income distribution over the last two decades using disaggregate household level data.
- Experiences across Indian states suggest an important role for economic policy in shaping the inclusiveness of growth.
Key findings
- States with higher financial development experienced greater relative gains for the poor.
- States with more flexible labor markets experienced greater relative gains for the poor.
- States with higher average education experienced greater relative gains for the poor.
- Improving infrastructure may also lead to a growth process that is more inclusive of the poor.
Policy implications and recommendations
- Promote financial development to enhance the relative gains of the poor.
- Increase labor market flexibility to support inclusive distributional outcomes from growth.
- Invest in average education levels to improve the share of growth accruing to poorer households.
- Improve infrastructure as a pathway to make growth more inclusive of the poor.
Subjects and keywords
- Subjects: Consumption, Income distribution, Income inequality, Labor, Poverty
- Keywords: India, state, WP
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