Public Policy, Economic Growth and Poverty Alleviation: A Study in the Indian States

This paper examines the public policy and allocation of funds of the government and their effects on growth and reduction of poverty in the Indian context. Growth is very important for poverty alleviation but only growth is not always sufficient for reduction of poverty. The increase in income and economic growth need to be supplemented by distributive and welfare measures for the poor. The theoretical and empirical results of this study suggest that capital expenditure and public expenditure on infrastructure are more effective in promoting growth and reducing poverty compared to expenditures for social sector development. So, the major thrust should be on growth without undermining the policy measures for social welfare. Keywords: capital expenditure, social expenditure, infrastructure, growth, direct benefits, poverty JEL Classification: H11, H54, O23