Poverty, Inequality and Growth: Reviewing The Past and Looking Ahead

It is an honour to be invited to deliver the D.T. Lakdawala Memorial Lecture. Prof. Lakdawalafounded the Sardar Patel Institute of Economic and Social Research and he was one of the mostdistinguished economists of his generation. He had deep interest in the measurement of povertyand made important contributions to the national debate in this area. Since it is in this context thatI first met him, allow me to begin by recalling that occasion.It was in 1978 when I was working in the World Bank in Washington DC and visiting Delhion holidays. I called on Yoginder K. Alagh, another stalwart from the Sardar Patel Institute, whowas then the Advisor for the Perspective Planning Division, Planning Commission of India. In thecourse of the meeting, I mentioned that I was doing some empirical work on trends in rural povertyin India arising out of Pranab Bardhan’s 1971 paper which showed that rural poverty had increasedbetween 1960-61 and 1967-68 (Ahluwalia, 1978). Bardhan’s result was contrary to the findings ofB.S. Minhas who found a steady decline and the Bardhan paper was often quoted as demonstratingthe failure of our growth strategy. I had a different view. I felt rural poverty was affected by the levelof agricultural production per head of the rural population in the same year and also with one yearlag and on this basis I felt the high poverty in 1967-68 did not reflect a trend increase but could beexplained by the fact that agricultural production per head of the rural population was very low in1967-68 and also in the previous year.