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and mental health, the Survey highlights that both income per capita (as a proxy for economic
growth) and inequality have similar relationships with socio-economic indicators. Thus, unlike
in advanced economies, in India economic growth and inequality converge in terms of their
effects on socio-economic indicators. Furthermore, this chapter finds that economic growth has
a far greater impact on poverty alleviation than inequality. Therefore, given India’s stage of
development, India must continue to focus on economic growth to lift the poor out of poverty
by expanding the overall pie. Note that this policy focus does not imply that redistributive
objectives are unimportant, but that redistribution is only feasible in a developing economy if
the size of the economic pie grows.

CHAPTER AT A GLANCE

¾ The relationship between inequality and socio-economic outcomes, on the one hand, and
economic growth and socio-economic outcomes, on the other hand, is different in India
from that observed in advanced economies.

¾ By examining the correlation of inequality and per-capita income with a range of socio-
economic indicators, including health, education, life expectancy, infant mortality, birth
and death rates, fertility rates, crime, drug usage and mental health, the Survey highlights
that both economic growth – as reflected in the income per capita at the state level –and
inequality have similar relationships with socio-economic indicators.
¾ Unlike in advanced economies, economic growth and inequality converge in terms of
their effects on socio-economic indicators in India.

¾ Economic growth has a far greater impact on poverty alleviation than inequality.

¾ Given India’s stage of development, India must continue to focus on economic growth to
lift the poor out of poverty by expanding the overall pie.

¾ Redistribution is only feasible in a developing economy if the size of the economic pie
grows.

REFERENCES

Agrawal, Pradeep. 2015. Reducing Poverty in India: The Role of Economic Growth. IEG
Working Paper No. 349
Brady, David. 2003. "Rethinking the Sociological Measurement of Poverty." Social Forces 81:
715-752.

Cervone, Carmen, Scatolon Andrea. 2019. Fair Enough? The Inequality Paradox, Inequality
Awareness, and System Justification. https://www.in-mind.org/article/fair-enough-the-
inequality-paradox-inequality-awareness-and-system-justification?gclid=EAIaIQobChMI6qW
51NaW7gIV8oJLBR3S0QU3EAMYASAAEgI7vfD_BwE

Cochrane John H., Lee E. Ohanian, George P. Shultz, 2015. "Conclusions and Solutions," Book
Chapters, in: Tom Church & Chris Miller & John B. Taylor (ed.),Inequality & Economic Policy,
chapter 7, Hoover Institution, Stanford University.