Worldwide experience suggests that the primary conditions for sustained economic growth and poverty reduction are sound macroeconomic policies, open trade relations, and increases in human and physical capital. However, sustained development and poverty reduction also hinge on a comprehensive development framework. Markets need to be incentive based, yet regulated, functioning alongside an adequately supervised financial sector. Other prerequisites include effective health, education and social services, quality infrastructure and public services, and policies oriented to environmental and human development. This World Bank Country Study for India is the first of its kind in the Bank’s new comprehensive approach to country reports. It argues that reforms that reduce the risk of macroeconomic instability in such a framework would also be effective in reducing poverty–by increasing the access of the poor to human development, reducing distortions and expanding the demand for labour.
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