InclusiveGrowth

Inclusivegrowth is a concept that advances equitable opportunities for economic participants

during economic growth with benefits incurred by every section of society. The definition
of inclusive growth implies direct links between the macroeconomic and microeconomic
determinants of the economy and economic growth.

balance between economic and sustainable development.

Thegoal of such growth is to strike a in traditional
In other words, instead of only focusing on the economic outcomes as
focuses more on equity. Inclusive growth perfectly facilitates the
models, inclusive growth ...

stability and development of the global economy.

Elements ofInclusive Growth:

Poverty Reduction.
of
Employment generation and Increase in quantity quality employment.
&

Agriculture Development
Industrial Development.
Social Sector Development.
Reduction in regional disparities.
Protecting the environment.
Equal distribution of income.

How can inelusivegrowth beachieved?

First. high. sustainable growth will create and expand economic opportunities.... ADB's
support for achieving inclusive growth in developing countries includes investment in
infrastructure to achieve high sustainable economic progress, connect the poor to markets, and
increase their access to basic productive assets.

In the first of a two-part seies, Josh Stott outines what inclusive growth is and why it's
important. What is inclusive growth and why does it matter? Inclusive Growth -growth that
benefits everyone - is in fashion.

Inclusive growth is measured by income growth and distributions which are calibrated by
combining GDP per capita growth and income inequality GINI coefficient

How do you build an inclusive economy?

1. Social infrastructure is critical
2.
for creating inclusive labour markets (Inclusive livelihoods).
Choosing economic gardening over corporate 'hunting' can revitalise
local economies (Inclusive
wealth) .
3. Institutions and citizens can work
an economy
together to put people at the heart of
(Inclusive voice)
 Introduction
Inclusive growth means economic growth that creates
in reducing poverty
employment opportunittes and .

t means
help
having access to essential services in health and education by the p00r. It
providing equality of opportunity. empowering people incliudes
development through education and skill
I t also
encompasses a growth process that
governance and helps in creation of a
is environment friendly growth, aims for
gender sensitive society good
As per OECD
(Organ1sation for Economic
distributed fairly Co-operation
economic and
Is
growth that is Development), inclusive
Elements of Inclusive
across
society and creates opportunities forgrowth
all
Growth
Skill Development

Harnessing the
population their demographic dividend will depend
key role here health, education, vocational upon the
employability of the
working age
training and skills. Skill
India is
facing a dual development plays a
challenge in skill
development:
First, there Is a
paucity of highly trained workforce
Second there is
non-employment conventionally trained
According to the Economic
of
education Survey 2017, over 30% of youths
employment or training) youth in India are
S1milarly. UNICEF 2019 NEET (Not in
have the reports stats that at least
education and skills 47%
Financial Inclusion necessary for employmentofinIndian youth are not on
2030. track to

Financial Inclusion is the

groups at
affordable costs.process of ensuring access to
Financial inclusion is financial services to
which initiates a necessary for vulnerable
virtuous cycle of inclusive growth as it leads
Technological Advancement economic to the
culture
development. of
saving
The world is
advancements moving towards an era of
the way these have capabilities to bothlndustrial Revolution
are
being decrease or increase 4.0. These
Several intiatives have used the
inequalitytechnological
digitally literate been taken by the depending on
population can leverage government, eg. Digital India
Technology can help to combat technology for endless Mission,
other
challenges too, eg possibilities so thata
oAgriculture-
to Modern
consumer more technology can help in
efficient
Manufacturing- Technology can
and
competitive making an agro-value chair from farmer
materials,
the help of land, and linkages with resolve the
sound the user problems of finance,
technology. market. GST was
Education- Innovative made procuring raw
digital technologies can
learning, increasing access possible only with
to trainers create
and mentors, new forms of
providing useful adaptive
data in
and peer
real-time.
 3
Health-Technologies could transform the delivery of public health services -extend
care through remote health services
o Governance- Technology can cut down delays, corruption, and inefficiency in the
delivery of a public service
Economic Growth

India is among the fastest-growing majoreconomies in the world. However, currently Indian
economy is facing slowdown due to both cyclic and structural challenges.
However, the target of becoming a $ 5 trilion economy by 2024-25 can allow India to reduce
inequality, increase social expenditure and provide employment toal
Social Development

I t means the empowerment of all marginalised sections of the population like

SC/ISTIOBC/Minorities, women and transgenders.
Empowerment can be done by improving institutions of the social structure i.e. hospitals
care in the rural areas, schools, universities, etc.
especially primary
Investment in social structures will not only boost growth (by fiscal stimulus) but will also
create a and capable generation to handle future work.
healthy

Challenges in Achieving Inclusive Growth

Poverty
As per the Multidimensional Poverty Index (MPI) 2018, India lifted 271 million people
between 2005-06 and 2015-16, with the poorest regions, groups, and children, reducing
poverty fastest. India demonstrates the clearest pro-poor pattern at the sub-national level.
Still, despite the massive gains, 373 million Indians continue to experience acute
deprivations. Additionally, 8.8% of the population lives in severe multidimensional poverty
and 19.3% of the population are vulnerable to multidimensional poverty.

Unemployment
A s per the Periodic Labour Force Survey (PLFS) of NSSO, the unemployment rate
among the urban workforce was 7.8%, while the unemployment rate for the rural workforce
was 5.3% the total unemployment rate at 6.1%.
totaling
The quality and quantity of employment in Ihdia are low due to iliteracy and due to over-
dependence on agriculture.
The quality of employment is a problem as more than 80% of people work in the informal
sector without any social security.

Low job growth is due to the following factors:

o Low investment

o Low capital utilization in industry

o Low agriculture growth

Agriculture Backwardness

Around 44% of people in India have

agriculture-related employment but its contribution to
the Indian GDP is only 16.5% which lead to
widespread poverty
Issues in agriculture are as follows:
 o Declining per capita land availability
oA slow reduction in the share
of employment
Low labour
o
productivity
Decline in agriculture
yield due to climate change, land
of water degradation and unavailability
Disparities in growth across regions and crops
Issues with Social
Development
Social development is one of the key concerns for
problems such as: inclusive growth. But it is facing some

o
Significant regional, social and
Low level and slow
gender disparities
growth in public expenditure
o The poor particularly in health and education
quality delivery system
o

Social indicators aremuch lower for OBC,

SC, ST, and Muslims
Malnutrition among the children India ranks
102
-

in Global
Regional Disparities Hunger Index
Regional disparities are a
between rich and poor etc. major concern for India. Factors like the caste
where some contribute to the regional system, gap
specific groups hold more disparities which create a system
Some of the
privileges over others.
regional disparities problems are as
follow
In terms of
other hand,
literacy rate, Kerala is the most literate
literacy rate of Bihar is only 63.82% state with 93.1% literacy, on the
In terms of
per capita income, Goa's
per capita income of Bihar is per capita income is Rs
just one-tenth of that ie 4,67,998 in 2018 while
Rs 43,822
Measuring Inclusive Growth
Inclusive Development Index (IDI)
In the Inclusive
India ranked 62ndDevelopment Index (1DI) compiled by the World
in Group of 20
out of 74
emerging countries and was among Economic Forum (WEF),
(G-20) countries. the least inclusive countries
The IDI is based on the
idea that most
by their own standard of people base their country's
living. growth not on GDP but
It gives a measure of
inequality based on three parameters:
o
Growth and development
Inclusion
o
Inter-generational equity and sustainability.
India also did not make it to
the top 10 most
where its inclusive emerging and
neighbours Nepal, China and Sri Lanka made a mark. developing economies.
India performed its best in
terms of
for which credit can be
attributed to its "intergenerational
equity and
demographic dividend. sustainability", ranking 44"
 5
Social Progress Index (SPI)

It is an
aggregate index of social and environmental indicators which includes the
following
Basic human need
Foundation of well being
o Opportunity

Limitation of other indices

GDP: It does not include non-market activities.

Excludes factors like environment, equality, etc

o Gini Coeficient:

Only income inequalities are included and other inequalities like social inequality,
equality of opportunities, etc are ignored.
o Gross Happiness Index:

lgnores gender neutrality, education, etc

o HDI:

The unequal distribution of wealth is ignored.

Benefits of SPI

SPl measures the outcomes of the government measures rather than money spent. It
also takes account of efficiency by which money spent by the government has been
used.

o It is more comprehensive.

Global Slavery Index

I t is released by the Walk Free Foundation of Australia.

Modern
Slavery means a situation where one person has taken away another person's
freedom,
to control their body so that
they can be exploited.
FactorS responsible for modern slavery:

o Absence of rights
oLack of physical safety
Access to necessities such as health care, education, food, etc
o Pattern of migration
Government actions to reduce modern slavey
India has worked in the
right direction by criminalizing trafficking. slavery. forced labor,
child prostitution. and child
marriage.
 Measures Taken India to Achieve Inclusive Growth
Several schemes are
includes the following being implemented by the government for inclusive
growth which
o
Mahatma Gandhi National
Rural
Prime Minister's Employment Guarantee Act Scheme (MGNREGA)
Employment Generation Programme (PMEGP)
Mudra Bank scheme
Pt. Deen Dayal Upadhyaya Grameen
Kaushalya Yojana (DDU-GKY)
o
Deendayal Antyodaya Yojana- National Urban Livelihoods Mission
Sarva Siksha
Abhiyan (SSA) (DAY-NULM)
National Rural Health
Mission (NRHM)
Bharat Nirman
Swachh Bharat Mission
Mission Ayushman
o
Pradhan Mantri Jan Dhan
Yojana
Government is working with NGOs
and International
o
DISHA groupings in
policy making eg
Project being implemented in
is
employment and entrepreneurship partnership with UNDP for
NITI Aayog's opportunities for women in India.creating
Strategy for New India @75 has the
growth: following objectives for the inclusive
oTo have a rapid
growth, which reaches 9-10% by
sustained and formalized. 2022-23, which is inclusive, clean,
To Leverage technology for inclusive, sustainable and
2022-23. participatory development by
To have an inclusive
development in the cities to ensure that urban
dwellers including recent
migrants can avail city services. poor and slum
o To make schools more
inclusive by addressing the barriers
environment (e.g. accessible toilets), related to the
admission procedures as well as physical
design. curriculum
To make
higher education more inclusive for the most
vulnerable groups
To provide
quality ambulatory services for an inclusive
rehabilitative and palliative care, close to the package of diagnostic, curative
people.
To prepare an inclusive
policy framework with citizens at the center
Conclusion
Indian government along with the state
continue to focus on eradicating governments and local governments should
poverty and achieving sustainable
improve the lives of India's people. development in order to
Through innovative partnerships with an international
private companies, inclusive and equitable growth canorganization,
be targeted
civil societies, and

Inclusive growth will help in the

empowerment of vulnerable and marginalized
improve livelihoods. and augment skill-building for women. populations
Contents:
Subject-Matter
In
of Second Generation of
Economic Reforms:
order to consolidate its
attempts towards further economic reforms. India is
now committed to undertake second
realise its benefits within definite timegeneration
of economic reforms so as to
frame. On November 27, 2001, the then
Prime Minister Mr. A.B.
Vajpayee constituted a Cabinet Committee on
EconomicC
Reforms under him to try to accelerate second
generation economic reforms.
of

Members of this high-power committee includeså¬"Home Minister, Finance

Minister and Commerce Minister, Other members of the Committee includes
Minister of Law. Rural Development, Disinvestment and
Agriculture and also
Deputy Chairman of the Planning Commission. This is the first time a cabinet
committee of this type has been constituted by the government.

The decision to constitute such a committee was taken after a meeting of the
Prime Minister's Economic Advisory Council in September 2001. The council
headed by the Prime Minister considered ways to give a push to the economy
The main functions of the committee include over-seeing, directing and facilitating
policy and institutional reforms.

Second generation of economic reforms in the country gave special stress on

fiscal reforms, financial reforms, structural reforms, labour law reforms etc. Major
fiscal reforms have been undertaken for broadening the income tax base and
streamlining the excise and customs duty structures.
Major financial sector reforms undertaken by the government include allowing
private companies to enter into insurance sector, allowing foreign bank to open
their branches in India.

Implement of New Growth Strategy:

In his budget speech 2000-01, the then Finance Minister Yashwant Sinha clearly
stated that the Government wants to carry forward the process of introducing and
implementing the Second Generation Reforms at the earliest.

Commenting on philosophy of Second Generation Reforms Mr. Sinha observed,

"Growth is not just an end in itself. It is critical vehicle for increasing employment
and raisin-g the living standards of our people, especially of the poorest.

Sustained, broad based growth, combined with all our programmes for
accelerating rural development, building roads, promoting housing, boosting
knowledge based industries and enhancing the quality of human resources, will
impart strong impetus to employment expansion. There can be no better cure for
poverty than this in our country."

In order to implement the new growth strategy the then Finance Minister
identified the following new objectives for attaining required growth:
) To strengthen the foundations of growth of the rural economy of our country.
especially agriculture and allied activities
(i) To nurture the revolutionary potential of the
viz., InfoTech, biotechnology and
new knowledge based industries
pharmaceuticals
i) To strengthen and modernize the
textiles, leather, agro- country's various traditional industries like
processing and the SSI sector
iv) To accord highest priority on human
sector programmes and resource development and other soCial
policies related to education, health and other s0cial
services giving special emphasis on the poorest and weaker sections of the
sOciety.

(v) To mount sustained attack

railways, airways, ports and infrastructure bottlenecks in power, roads,
on
telecom
(vi) To strengthen our role in the
world economy
îhancing higher foreign investment and through rapid growth of exports
management. arranging prudent external debt
(vii) To establish a credible
framework on fiscal
discipline.
During the first decade of our
moderately higher growth rateeconomic reforms, the country has
ranging 6 to 7 per cent, experienced
a
exchange reserves to the extent of $ 51.05between build up a foreign
external debt to the tune of US billion in 2001-02;
ratio to 87 per $ 100.4 billion in managed its
2001, improved its
cent, contained the wholesale export-import
cent and could marginally reduce the price index to the tune of 3.5 per
finally
in 1990-91 to 5.7 per cent in fiscal deficit from 6.6
2001-02. per cent of GDP

Thus the economic reforms

have been able to stabilise
economy and could shift the gear of the the fundamentals of the
reforms to economy from crisis-driven economic
development-driven
one.

Keeping this trend in mind, the then Finance Minister in

speech observed, "I propose to put India on a his budget
(2000-01)
creating growth path of 7 to 8 per cent per sustained, equitable and
in order to banish the job-
year
scourge of poverty from our land within a decade.
India's decade of The next 10
development." years will be
Thus during the first
phase of our economic reforms, industrial sector the
priority, neglecting the potential of the agriculture got
A. Saith observed, "India is sector. In this connection, Mr.
considered to be a good performer," but
the "industrial primacy
strategy has failed to generate employment, the
relative neglect of agriculture has further
reduced the
capacity of the economy, especially when compared tolabour absorptive
the rate of
expansion of the population at working stage."
Establishing inter-relationship between agriculture and
Sankar and Shand in their joint study observed, "More industry Kaliarajan,
support the view that reforms should importantly, our results
ideallybe targeted at both sectors given the
bi-directional interdependency prevailing in most states and for all
India. Reforms
Structural Adjustment
condition for
a term used to describe the policies requested by the IMF in
structural adjustment Is the root
when dealing with an economic crisis in. The policies are designed to tackle
financial aid
of the problem and provide a
framework for long term development and long term growth.
cause

of free-market policies such

as
involve a combination
Structural adjustment policies uSually been
Structural adjustment policies have
fiscal austerity, free trade and deregulation.
privatisation, often unsuitable for developing
the free-market policies are
controversial with detractors arguing
lower economic growth and greater
inequality.
economies and lead to
reforms
that these free-market
structural adjustment (1IMF and World Bank) argue improve
Supporters of efficient economy,
which ultimately help to
a more open and
are essential for promoting
reduce relative poverty
living standards and
in the
painful changes
results, often criticised for creating have
mixed
have had Structural adjustment policies
In practice, they costs as benefits.
Recently,
Poverty
which give as many to draw up
countries encouraged
economy reduction, with
focus on poverty
placed greater
(PRSPs)
Reduction Strategy Papers

Structural adjustment policies

this may
Structural Adjustment
fiscal policy). In practice,
monetary or
-

Macroeconomic

Policies to tackle
Inflation (e.g. tightening of
higher taxes. with
rates or Can be combined
involve higher interest taxes, lower spending.
with a budget deficit. Higher
Policies to deal to
and opening the
inflation. economy
the policy to reduce domestic
industries
Barriers which protect
Removal of Tariff
to float In practice, this
free trade.
Rates and allowing the currency
boost
Fixed Exchange competitiveness and help
Abandoning greater
devaluation. This
can help give exports and usually reduces living
involves
it increases the cost of imports
domestic demand. However,

standards.

Structural Adjustment and productivity in

Micro Economic increase competitiveness
designed to are
microeconomic side, policies
On the policies such as:
free market supply-side
tend to involve
These
the economy.
in
This raises money for
the government, but also,
of state-owned industries. have a profit
.Privatisation because private firms
and productivity.
theory, can help improve efficiency
efficient.
incentive to be more hold back
distort the market and lead to over-supply and
Ending food subsidies. This can
industrial-based economy.
of the economy to a more
diversification
bureaucracy
Reducing red tape and
Closingtax loopholes and reducing coruption
firms to enter the industry.
to encourage competition and
more
De-regulation of markets
 Problems with Structural
Adjustment
1. Policies of
mass
tackling inflation. Higher interest rates,
unemployment They are often higher taxes, often cause a recession and
why structural painful in the short

To defend
adjustment is often very unpopular in the term This is perhaps the biggest reason
structural countries where it is
untackled, the inflation adjustment, we could say, it is implemented
necessary to deal with
could just get worse inflation f left
pain is often leading to a more painful future
-

2. temporary Once tackled low

inflation provides for a adjustment Also, the
Spending Cuts falls on period of economic stability.
spending cuts on importantthe poorest section of society Often
adjustment has often been welfare services such as educationstructural adjustment has led to
There is no perceived as widening and health care Structural
cuts have to fall inequality
reason
could be focused spending on the
on
military spending poorest sections of
earners. Recently. the IMF has budget reduced through society. Spending cuts
Or the
policies with things such as encouraged poverty reduction to be a higher taxes on high
However, critics Poverty Reduction Strategy part of structural adjustment
remain the same
argue that despite these
new
Papers (PRSPs)
targets for reducing
3. Loss of
National poverty, the essential policies
Sovereignty. IMF policies need to be
heavy financial penalty
developing economies
This gives implemented otherwise there can be a
foreign bodies great influence
4. Greater over key
inequality. economic issues in
inequality For example. Structural adjustment policies have often shown
have not benefitted privatisation
a wider
has often a
benefitted a small rich elite tendency to greater
5.
Ignore social benefits. population
Privatisation
(e.g. Russia 1995) and
higher prices for a of key
key public utilities
when the commodity. Arguably market incentiveslike Water (e.g. Bolivia) have led to
industry plays an important social welfare don't have the same
have often stuck to a certain function. Bt, structural importance
6. ideology even when not adjustment policies
Unemployment. Control of inflation and fiscal appropriate.
lower economic
7. Social
growth at least in the short-term. austerity has led to higher unemployment and
-

development ignored. To
spending programs which benefit the meet fiscal criteria, governments have often cut
8. Free trade often poorest members of society. welfare
hampers diversification.
advantage in selling raw materials. But, this Developing economies often have a
developed countries often impose tariffs on prevents economy diversifying. To make things comparative
to have free trade
for their agricultural exports, but then want worse
exports developing countries

Evaluation of structural adjustment

Like many general
policies such as structural adjustment, it
implemented To make sweeping statements such depends on how it is
as Structural adjustment is good/bad
too vague depends on the quality of supply-side
It is
At best, structural adjustment
policies
can provide the political will to take
steps to deal with an economic crisis and provide necessary and difficult
stability.
a framework for long term
growth and
At worst, it can place too much emphasis
macroeconomic objectives such as low
on
inflation, balanced budget causing an
unnecessarily deep recession. It can provide an
opportunity to pursue market-oriented supply-side policies which do little to
productivity but increase inequality and improve
poverty