Pro-poorness of Growth in Gujarat and Tamil Nadu

This article presents a comparative analysis of poverty reduction and pro-poorness of growth in Gujarat and Tamil Nadu during the post-reform period. We use the unit-level data of the Consumer Expenditure Surveys of the National Sample Survey Office to estimate the poverty ratio for both rural and urban areas of these states. The first period (1993–94 to 2004–05) recorded a slow poverty reduction, but the second period (2004–05 to 2011–12) witnessed a faster reduction in poverty in rural and urban areas in both the states concerned.

The authors are thankful to Banaras Hindu University for the Institute of Eminence seed grant received for this research project.

Poverty reduction is a primary concern of development policy. Despite the steady long-term high economic growth in India during the post-reform period, one of the primary concerns of the policymakers continues to be the assessment of how far this growth has been pro-poor (Planning Commission 2011b). The theory of trickle-down economics represents an obsession with the gross domestic product (GDP) and income growth as the most reliable measure of economic success. The theory argues that only economic growth matters for poverty reduction and a growing economy will take care of the poor. However, the critics of trickle-down economics point out that the benefits of growth within an economy are rarely spread evenly.

An unequal rise in income may even slow down economic growth and the rate of reduction of poverty (Datt and Ravallion 1992; Jain and Tendulkar 1990; Mishra 2015). The focus on poverty reduction has generated interest in pro-poor growth. However, there are no agreements on defining or measuring pro-poor growth, and it remains a policy and academic debate over time. The pro-poor growth debate started with the seminal work of Ahluwalia and Chenery (1974) on “redistribution with growth” and was later carried forward by several others (Kakwani and Pernia 2000; Kakwani 2001; Dollar and Kraay 2002; Kakwani and Son 2003; Ravallion and Chen 2003; Son 2004; Ravallion 2004; Kraay 2006; Ali and Son 2007; Ali and Zhuang 2007).