Can Economic Growth Transform into Human Capabilities in India

This paper examines the pro-poorness of economic growth in India by considering the development principles of the capabilities approach (Sen 1989, 2002, Nussbaum 2000, Alkire 2002 a, Fukuda-Parr 2003). We first develop multi-dimensional indices on four specific domains, viz., longevity and health, education, living conditions and livelihood security and then construct the aggregate index of human capability for 29 states and union territories in India. The state level composite index of human capability is derived through the aggregation of four domains covering sixteen variables using the method of twostage principal components. Subsequently, we examine the relationships between economic growth and various human capability dimensions in a cross-sectional framework. Although, our results indicate a positive association between per capita real state domestic product and each of the four capability dimensions, the extent of correlation remains high for living conditions and livelihood securities and low for longevity and educational dimensions. We therefore conclude that while economic growth initiated some improvements in living conditions and livelihood security, its role remained limited in enhancing the health and educational capabilities that may require pro-poor public policies. (180 words)