This paper analyses the problem of the urban poor in India from a primarily macro-economic perspective, tracing the origins of their economic status to their low share in the factor earnings generated in individual industries. A macro-economic model then simulates the implications for them of a range of alternative policies, including growth on the current pattern of development priorities, income transfers from rich to poor and growth-with-redistribution via the creation of new income sources specifically for the target groups. The major conclusions are that on current development strategies the outlook for the urban poor is bleak, but through growth-with-redistribution moderate sacrifices of income growth by the richer classes can secure very substantial improvements for the poor.
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