Disclaimer: We do not sell, advertise, or facilitate the sale of any books or physical products.
Traditional economists have argued that inequality is an inherent part of the growth process. During the phase of structural transformation, certain sectors benefit more than others, resulting in inequality in the early stages of development. This dynamic is encapsulated in the ‘Kuznets Curve’, where inequality first rises and then falls.
However, this pattern has not been observed in the Indian context. Increased growth rates in India have not automatically led to a reduction in inequality.
Inclusive growth refers to economic growth that generates new economic opportunities and ensures these opportunities are accessible to all, especially the poor. It focuses on both rapid opportunity creation and equitable access.
Felipe and Hasan highlight four key features of the Asian economy that have implications for inclusive growth:
High output growth with low employment growth
Widening wage differentials between income quantiles and rural-urban sectors
High or rising employment in the informal sector where productivity and wages are low
These issues highlight the need for both opportunity creation and opportunity equalisation. Social safety nets must also be provided for those left behind in the growth process.
The International Policy Centre for Inclusive Growth (IPC-IG) is a partnership between the Poverty Practice of the Bureau for Development Policy, UNDP and the Government of Brazil. Located in Brasilia, IPC-IG facilitates South-South learning aimed at enhancing inclusive policy formulation in developing nations.
Its mission includes building capacities for policy design, implementation, and evaluation, with a focus on inclusive growth through applied research and training.
The 11th Five Year Plan targeted an average GDP growth rate of 8.2% compared to 7.7% during the 10th Plan. While economic growth was substantial, inclusiveness remained below expectations.
The plan defined inclusive growth as “a growth process that yields broad-based benefits and ensures equality of opportunity for all.” Yet, progress in sectors such as agriculture, poverty reduction, education, and health was insufficient.
India missed several targets under the Millennium Development Goals (MDG), including literacy improvements among backward communities. Weak agricultural growth and underperformance of schemes like MGNREGS reflect the implementation gap.
The Planning Commission introduced the 12th Plan with the aim of “Faster, More Inclusive and Sustainable Growth.” The plan targets GDP growth of 9.0% to 9.5% between 2012 and 2017.
Key features include increasing health expenditure from 1.3% to 2.0% of GDP, raising literacy rates to 100%, and enhancing employment generation through the manufacturing sector.
Prime Minister Manmohan Singh stressed the importance of fiscal discipline while pushing for rural development through government spending on agriculture, education, health, and welfare programs.
Priority areas included uplifting farmers, supporting small and cottage industries, and promoting employment and social welfare. The emphasis was that growth must become more inclusive.
Agriculture should be prioritised as part of inclusive growth. The sector's contribution to GDP declined from 44.6% in 1958–59 to 17.2% in 2010–11, while its labour absorption has not decreased proportionately.
This imbalance suggests the agricultural sector is overburdened with labour while its productivity contribution is declining. Hence, investment in irrigation, water management, credit, research, extension, and marketing is crucial.
Land and water management—including watershed development—is vital for sustainable agriculture. Agro-based industries in rural areas offer additional employment and reduce dependence on farming.
High public investment in infrastructure is a cornerstone of inclusive growth. In many developing economies, public spending as a percentage of GDP is both low and declining, affecting rural development.
This has led to a slowdown in agricultural growth in India. Physical infrastructure (irrigation, roads, transport, electricity) and human infrastructure (health, education) must be prioritised.
Increased public spending on health and education is necessary for inclusive development, along with greater effectiveness of these expenditures.
Interventions like child and maternal immunisation, antenatal care, nutritional support (including exclusive breastfeeding), and neonatal services can reduce infant mortality and malnutrition.
Strong and accountable institutions are crucial for service delivery in health, education, and rural welfare. Institutional failures in rural India hinder inclusive service delivery.
Empowering women and enhancing decentralisation through stronger Panchayati Raj Institutions (PRIs) improve responsiveness and delivery efficiency.
Social protection systems help reduce poverty and inequality through redistribution and inclusion. India has implemented several programs to uplift marginalised sections.
Key schemes include:
Public Distribution System (PDS) – Direct food subsidy
Indira Awas Yojana – Housing for the poor
Direct cash transfers – Old age pension, widow pension, disability pension, and national family benefit schemes
Incentive-based programs – Institutional delivery, family planning, etc.
Educational support programs – Scholarships, free books, bicycles, uniforms, midday meals, etc.
Employment generation is a critical pillar of inclusive growth. Both central and state governments run various schemes to provide livelihood security to the rural and urban poor.
The most notable is the National Rural Employment Guarantee Act (NREGA), 2005, which guarantees 100 days of unskilled work annually to each rural household.
The law mandates that work must be provided within 15 days of a valid application, or an unemployment allowance must be given. This makes employment a legal entitlement.
Please login to comment and rate.
‹ ›