Examining Growth–Inequality Nexus in Post-reform Odisha: A Sectoral Decomposition Analysis

Abstract

Abstract

This article examines the nexus between economic growth and inequality in Odisha at sectoral level for the post-reform period. Odisha has witnessed high economic growth in the post-reform period. With high growth rate, the sectoral composition of income has also registered a major change. However, the post-reform period too witnessed an increase in disparities in income among the sectors and increased inequality. So the question that normally arises here is whether the sector witnessing high growth remains the major contributor to income inequality in the state during the post-reform period? While seeking an answer to this question, we observed that the primary sector which is growing at a low rate caused a reduction in inequality. But, the tertiary sector which is the main driver of overall economic growth in Odisha in the post-reform period remains the major contributor to the rise in inequality. The study supports the hypothesis found at national level that a sector driving the overall economic growth also positively contributes to inequality.