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Inequality and Growth: Conflict or Convergence? 143

4.24 Finally, Figure 19 plots value of change in MP HCR per year against growth of real NSDP
per year between 1998-99 and 2005-06, and between 2005-06 and 2015-16. The association
between growth and change in MP is negative, reinforcing the idea that growth leads to poverty
reduction.

Figure 19: Correlation between economic growth and multi-dimensional poverty

Source: Survey calculations based MoSPI and MPI data.

4.25 These findings are consistent with the historical evidence as well. World Bank (2000)
find that India could achieve sustained decline in poverty during 1970s-1990s only when the
GDP growth picked up from 3.5 per cent in the initial years. Also, rise in the growth of mean
consumption was responsible for approximately 87 per cent of the cumulative decline in poverty,
while redistribution contributed to only 13 per cent. Similarly, Kraay (2004) uses the evidence
from 80 countries to demonstrate that in medium to long run, growth in average incomes
contributed to 66-90 per cent of the variations in changes in poverty. Agrawal (2015) highlights
that economic growth had a bigger impact on reducing poverty. The findings reinforce previous
studies on the empirical relation between growth and poverty in India (see Nayyar (2005)).
More recently, analysing six decades of data from 1957 to 2012 for India, Dutt et. al., (2019)
find that growth reduced poverty, and their association has acquired more strength after the 1991
reforms. They also find that the pattern of growth has changed significantly after 1991. Poverty
is concentrating more and more in urban areas, as now one-in-three poor is living in urban
areas, which was about one-in-eight in the early 1950s. In the post-liberalisation period urban
growth and non-agricultural growth has emerged as a major driver of national poverty reduction
including rural poverty.

SUMMARY AND CONCLUSIONS

4.26 This chapter shows that 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. 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