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The train engine is moving fast, the coaches nearest to it are moving fast but the coaches in the rear are not moving as fast. Using this analogy, Maitreesh Ghatak of London School of Economics sought to know the sustainability of economic growth when gains go to a disproportionately small fraction of the population.
Speaking at the pre-event session of 64th conference of Indian Society of Labour Economics on ’Growing apart? Growth, poverty and inequality in post-liberalisation India’, Mr. Ghatak used extensive data to show the growth of inequality in the country after liberalisation.
“60% of India’s consumer expenditure is on food and energy,” he said, citing data from Centre for Monitoring the Indian Economy. He shared how the GDP of India has grown moving it from 17th position in early 1990s to the current 5th position. “But the per capita GDP rise of India has been from 161st position to 159th. In contrast, China’s GDP grew from 11th position to 2nd and at the same time its per capita GDP rank rose from 158th to 75th,” he said.
“Income distribution drives demand; this affects induced demand for factors of production, which drives income distribution. This interplay of the two could lead to segregation of the economy in terms of money/wealth with limited trickle down or up,” said Mr. Ghatak.
The ISLE conferences bring together academicians and public intellectuals studying of labour and industrial relations and economy. The 64th conference at the University of Hyderabad is set to begin from March 29 and end on March 31.
