Inclusiveness of Economic Growth in Uttar Pradesh

Abstract

The introduction of neo-liberalism in most of the developing countries raged the growth–inequality debate. It is evident from various available literatures that economic growth has been used as a major instrument to reduce poverty but, this expansion has been also accompanied by rising inequality in many developing countries including India. In order to deal with growing inequality, the major aim of India’s Eleventh Five-year Plan was inclusive growth. In India, the picture at sub-national level is completely different because many states, especially the BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) states, are lagging behind in both traditional and economical terms hence, a disaggregated analysis at sub-national level becomes necessary. This paper examined the impact of growth and inequality on poverty reduction by decomposing the change in poverty into growth effect and redistribution effect and estimating the pro-poor growth index and poverty equivalent growth rate for the rural and urban Uttar Pradesh using the CES 1993–94 (50th round), CES 2004–05 (61st round) and CES 2011–12 (68th round) data sets. The result indicates that poverty rate has highly declined in 2004–05 to 2011–12 as compared to 1993–94 to 2004–05 for both rural and urban area and effect of growth has dominant on poverty reduction in each time period. Interestingly, the growth of rural Uttar Pradesh has been inclusive during the period of 2004–05 to 2011–12, whereas in the urban area, increasing inequality hinders this inclusiveness.