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Economic Survey 2021 says India must focus on economic growth rather than redistribution to tackle poverty

The survey highlighted both economic growth – as reflected in the income per capita at the state level –and inequality have similar relationships with socio-economic indicators

January 29, 2021 / 03:41 PM IST
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Economic growth has a far greater impact on poverty alleviation than inequality and given India’s stage of development, it must continue to focus on economic growth to lift the poor out of poverty by expanding the overall pie, the Economic Survey 2020-21 said.

"... 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," the survey, drafted by Chief Economic Advisor Krishnamurthy Subramanian and his team, said in the chapter titled Inequality and Growth: Conflict or Convergence?

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The survey said 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.