Question

The Kuznets hypothesis predicts that rising incomes initially worsen inequality before improving it, but recent Indian evidence shows persistent inequality because growth has been concentrated in capital-intensive sectors. What does this imply about the Kuznets Curve?

• A. Kuznets hypothesis applies only for small economies
• B. It applies only to Asia
• C. It is irrelevant to agrarian economies only
• D. It will operate properly under certain economic conditions

Hint:

Remember the Kuznets Curve: \[ \boxed{ \text{Development} \rightarrow \text{Inequality Increases} \rightarrow \text{Inequality Declines} } \] However, this pattern is not automatic. It depends on factors such as:
• Employment-intensive growth.
• Structural transformation.
• Redistribution policies.
• Institutional quality.

Answer 1

The Correct Option is D