Growth, Structural Transformation and Poverty Reduction: Issues and Challenges with special reference to India* Aradhna Aggarwal Professor, Indian Studies Department of International Economics and Management Copenhagen Business School Porcelænshaven 24A, 1-4.sal 2000 Frederiksberg Mobile: +45 9145 5565 Email:
[email protected] [email protected] Abstract The present study analyses the growth-structural change-poverty linkages within the framework of the New Structural Economics using Indian data for the period since 1951-52. It finds that the relationship between growth, structural transformation and poverty reduction is complex and is characterized by various issues and challenges. It is influenced by country-specific idiosyncratic attributes as shaped by the broader growth strategy adopted by the government, its implementation, and its developmental outcomes. Failure to anticipate challenges in the development path adopted by the government is a chief cause of failure in reducing poverty. The study calls for informed state interventions to steer the economy to a sustained and inclusive development path. *The paper is prepared for presentation at the Inter-Agency Expert Group Meeting on "Employment and Decent Work for Poverty Eradication, in Support of the Second UN Decade for the Eradication of Poverty (2008-2017)" Bangkok: 4-6 May 2016 1 Growth, Structural Transformation and Poverty Reduction: Issues and Challenges with special reference to India 1. Introduction There is overwhelming evidence that rapid and sustained economic growth is crucial for reduction in poverty. But, there are substantial differences among countries with respect to the rate at which poverty declines with economic growth (Chen and Ravallion, 2010; Fosu, 2011; Islam and Kucera , 2014 among many others).