Battles Half Won

Abstract

Rapid growth since 1980 has transformed
 India from the world's 50th ranked economy in nominal
 U.S. dollars to the 10th largest in 2005. The growth of per
 capita income has helped reduce poverty. At the same time,
 evidence suggests that income inequality is rising and that
 the gap in average per capita income between the rich and
 poor states is growing. This paper reviews India's long
 term growth experience with a view to understanding the
 determinants of growth and the underlying political economy.
 The paper looks specifically at the political economy of
 India's growth transformation from a low-growth
 environment (pre-1980s) to a rapid-growth environment (post
 1980s) and asks how sustainable is this transformation in
 view of concerns about regional disparity and income
 inequality. The paper concludes that the pledge that
 India's post-independence leadership had undertaken to
 abolish mass poverty remains only partially redeemed. Half
 the battle still lies ahead. Many more would like the fruits
 of the economic boom to come to them. The greatest challenge
 for India's policy makers today is to balance the
 growth momentum with inclusionary policies.