This paper analyses the nature and causes of the patterns of inequality and poverty in India. Since the economic liberalization in the early 1990s, the evidence suggests increasing inequality (in both spatial and vertical terms) as well as persistent poverty. The macroeconomic policies possibly responsible for these trends include—? scal tightening, regressive tax policies and expenditure cuts; ? nancial sector reform that reduced institutional credit ? ow to small producers and agriculturalists; liberalization of rules for foreign and domestic investment, leading to more regional imbalance and skewed investment patterns, and trade liberalization, which has a? ected livelihoods and employment generation.