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Paper short abstract:

Growth, equality of income and poverty are important variables which have to be considered while formulating development strategies. The federal nature of the Indian republic challenges the planning process to reduce the incidence of poverty and maintain regional balance in development.

Paper long abstract:

Economic growth may not be a true indicator of living standards and well being of people. Some economists are of view that there is significantly negative relationship between inequality and growth in democratic countries. The greater the degree of income inequality, the lower the impact of growth on poverty reduction. Therefore, growth, equality of income and poverty are important variables which have to be considered while formulating development strategies. The average per capita income of the rural population is usually lower than that of the urban because per capita productivity in urban pursuits increases more rapidly than in agriculture. The federal nature of the Indian republic challenges the planning process to reduce the incidence of poverty and maintain regional balance in development. The high growth trajectory of India is somewhat deceptive as it has increased the interstate income gap between the rich and the poor states as well as the intrastate income gap between the rich and the poor people. In liberalised industrial policy, location of new industries in different states relies on attractions such as adequate infrastructure, administrative support and fiscal incentives. This increases regional inequalities as weaker states are less able to provide such attractions. A minor percentage of the population has surely benefitted from economic policies but majority of the rural and a significant part of the urban population, things have become worse. Therefore, development of rural infrastructure and increases in rural productivity should be prioritized. Sustainable development with environmental concerns is necessary for sustained growth.