This paper suggests that despite good performance on the growth front, progress in reducing poverty in the 1990s has left much to be desired. Concerted policy action is needed to lift the 350 million poor, who are increasingly concentrated in the poorer States, out of poverty. This requires not so much additional resources – which would only result in further leakages and swelling of the already bloated bureaucracy – as better policies and sound delivery mechanisms. The focus needs to shift from maximising the quantity of development funding to maximising development outcomes and the effectiveness of public service delivery.