The gradual but steady reform process since 1991 in a large democracy with high incidence of poverty naturally led to a wide debate on the effects of liberalisation. There is consensus that trend growth in GDP has improved to about 6 per cent per annum. But, attempts to quantify change of poverty in the post reform period have not led to general agreement on magnitude of poverty reduction. Some major macroeconomic policy issues emerging in the context of poverty reduction relate to:
• Effects of changing structure of production and income generation process on poverty and inequality.
• Adequacy of social sector expenditure by the state governments who have primary responsibility for education and health sectors.
• Changing labour market conditions and casualisation of labour.
• Role of public investment in infrastructure and irrigation.
• Effectiveness of credit delivery system to underdeveloped regions after
liberalization of the financial sector.
• Whether macro policies affect poverty primarily through growth or they play
additional role in addition to the growth effects.
• Some states have made substantial progress in poverty reduction while others
continue to stay on almost where they were a decade ago. Which forces have contributed to this situation: structural factors, inadequacy of resources or governance issues?