The latest economic survey has the following quote:

"unlike in advanced economies, in India economic growth and inequality converge in terms of their effects on socio-economic indicators."

A long thread on why this is not the case.. (1/N)

Here is what they do. The Gini Index (measure of inequality), is plotted against various indicators like education, health, life expectancy and so on, for 20 Indian states. The survey finds a POSITIVE CORRELATION between inequality and these indicators!

I decided to replicate these graphs, but with three changes. ONE, I included the correlation coefficient or R to quantify the strength of the relationship. TWO, I included all the states. and THREE... (3/N)

I made each graph twice. First, with Kerala and then without Kerala? Why- because it seems that Kerala is an outlier and is driving a lot of of this correlation. Why Kerala though?....(4/N)

Because, Kerala is more unequal than its counterparts( https://www.livemint.com/Opinion/v9bWm59FOXpedpKb7GhqCO/What-is-behind-high-inequality-in-Kerala.html), and it also performs much better on welfare indicators than other states

Here is what I found

HEALTH

The correlation is already low between inequality and health (0.26), but after dropping Kerala it drops further to 0.1.. (6/N)

EDUCATION

Here the drop is even more- from 0.2 to 0.04. Effectively, there is ZERO correlation between education and inequality, after dropping Kerala

The same holds for LIFE EXPECTANCY- again R falls from 0.3 to 0.07...

Finally, I look at Total Fertility Rate. Here the fall is much smaller...(9/N)

So, after removing the outlier state (Kerala), there is not much correlation between inequality and social welfare! What about income?....(10/N)

I find that regressing the log of per capita income on the log of these indicators, yields a POSITIVE AND SIGNIFICANT relationship between coefficients, both with and without Kerala. However, there is no significant relationship between Gini and the same indicators!...(11/N)

Thus, while a rise in per capita income has a positive effect on welfare indicators, the same is NOT TRUE for rising inequality. The claim that both have converging effects on socio-economic welfare is simply not true...(END)

@arjun_jayadev @rajendran_naray @anumayhem @qfint @DasguptaZico @SurbhiKesar @working_india @amitbasole

Apologies, the x axis in the graphs for total fertility rate should be labelled Gini, not per capita NSDP. It was a labelling error