INCLUSIVE GROWTH

AND
HOW TO ENSURE IT
Introduction
What is inclusive growth?

Need for Inclusive Growth

Elements of Inclusive Growth
Five interrelated elements of inclusive growth.
Poverty Reduction and increase in quantity and
quality of employment
Agricultural Development
Social Sector Development
Reduction in regional disparities
Protecting the environment
Trends in Poverty (%): India
Year Rural Urban Total

1973-74 56 49 55
1983 46 41 45
1993-94 37 32 36
2004-05
28 26 28
 Number of poor (in million)
Year Number (million)
1973-74 321
1983 323
1993-94 320
2004-05 302
Determinants of Rural Poverty
Agricultural Growth
Relative food prices
Rural non-farm sector
Rural wages
Governments’ development expenditure
Infrastructure
Human Development
 Policies for Poverty Alleviation
India adopted two pronged approach
Growth approach
Direct approach
Self employment program
Public Distribution System
National Rural Employment Guarantee Scheme (NREGS)
 Problems in Employment
Share in Output and Employment of different sectors

SECTOR G.D.P (%) EMPLOYMENT

(%)
AGRICULTURE 20 57

INDUSTRY 23 18

SERVICE 57 25
Inclusive Growth: Agriculture
Concerns in Agriculture
Deceleration in growth
Land and water problems
Disparities in growth
Long term factors
Goals Of Agricultural Development
Achieve growth in agriculture
sharing growth
maintain sustainability of agriculture
Deficits in Agriculture Growth
Six deficits in agriculture
 land and water management deficit
investment, credit and Infrastructure deficit,
research and extension (technology) deficit,
market deficit,
institutions deficit,
education/skill deficit
 Social Development
education and health
nutrition
 Regional Disparities
Significant Regional Disparities in India
Per capita income
Female infant mortality
Female literacy
Causes for disparities;
Investment in physical and human capital
Technology
Institutions including governance
 Environment
Degradation of land, water. Increase in pollution
levels
Challenges of climate change
Consumption patterns of rich
 What Should be done to
improve inclusive growth?
Equity is important for economic development
Agricultural Development
Economic reforms are important. But macro-poor policies
(fiscal, trade, financial, monetary etc.) should have pro-
poor focus
Structural change should have followed agriculture-
industry-services sequence
Development of manufacturing sector is important for
creation of productive employment
Equality of opportunities (education)
What should be done? (contd.)
Role of Technology
Shift focus of reforms to delivery systems
Importance of women’s economic and social
empowerment
Decentralization
Economic reforms in relation to socio-political
environment
Rights approach (civil, political and economic)
 Conclusion
There are strong social, economic and political reasons for
achieving broader and inclusive growth.
Socially, lack of inclusive growth leads to unrest among
many people.
There is also an economic argument. The measures which
raise equity also promote economic growth.
Lastly, the political argument is that no government in a
democracy can afford to ignore large sections of workers
and non-working population.
If it is not inclusive it can generate very severe social
tensions. Thus, politically, for having a stable and
democratic society one needs to have inclusive growth.
THANK YOU