Is Growth Enough for Poverty Reduction?

The discontentment with growth not being beneficial to all became a highly debated topic in academia and the arena of policymaking during the latter phase of reform when India achieved higher economic growth but sluggish poverty reduction. Realising the importance of this debate, the Government of India also targeted “inclusive growth” as a strategy to ensure that economic progress is pro-poor and inclusive. Accordingly, India’s Eleventh and Twelfth Five Year Plans envisioned the concept of inclusive growth and incor­porated all concrete strategies to enh­ance the welfare and participation of ­socially and economically disadvantaged groups (Planning Commission 2012). In the era of inclusive growth policies, for the balanced development of a country, a profound study of the same for local economies at the subnational level becomes equally important. It is because all states of the Indian union are quite diverse from the perspective of political economy as well as geography. Most ­Indian states have achieved higher growth during the post-reform period, especially during the 2000s (Kumar and Subramanian 2012; Sahoo and Paltasi­ngh 2019), but whether that growth has reduced poverty among all the regions needs to be explored.

This study attempts to examine the economic growth and poverty reduction in the case of the two newly formed states of the undivided Andhra Pradesh (AP), that is, AP and Telangana. The rationale for considering two Telugu-speaking Indian states spawns from several facts: first, the 2000s decade in both states of un­divided AP has recorded a faster growth rate than the 1990s (Vakul­bharanam and Motiram 2014). Nevertheless, there have been increased regi­onal disparities and inequality across socio-religious and economic groups, and also between rural and urban areas during the post-reform period (Dev and Ravi 2003; Dev 2008; Reddy and Bantilan 2012; Sahoo and Khan 2018; Sahoo et al 2019; Sahoo et al 2021; Sahoo and Paltasingh 2022). The long-standing demand for a separate state of Telangana¹ was based on the issue of gross economic neglect by the government of undivided AP (Rao 2011). It has been argued that the districts of Telangana are more poverty-ridden and backward. Though there are a large number of studies looking at the relationships between growth, poverty, and inequality (Radhakrishna 2015; Panagariya and Mukim 2014; Chauhan et al 2016), no such study has been att­empted on intra-regional disparities in poverty reduction among regions of states in comparison to the state average. This article is an
attempt in this regard to compare poverty reduction among the regions of these newly formed states of Telangana and AP during the post-­reform period with undivided AP. The broad question this article tries to ans­wer is: Which of these newly formed states witnessed a faster reduction in poverty in the post-reform period?