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ISBN - 978-93-81583-46-3  

Macroeconomic Analysis of India’s Inclusive Growth
Sunil Bhardwaj1, Rohit Bhagat2, Vinay Sharma3 1 Assistant Professor 1,2,3 The Business School, Bhaderwah Campus, University of Jammu, Jammu 1

National Conference on Emerging Challenges for Sustainable Business 2012 591 

Today we are claiming ourselves as the world’s fourth largest economy and the second fastest growing economy in Asia.5 crore in 2011. India is placed on 56th rank in global business competitiveness index. These economies are least affected by the global slowdown and can together act as a shock absorber for the world National Conference on Emerging Challenges for Sustainable Business 2012 592 . Innovation Efficiency Index and Poverty. Corresponding author: Sunil Bhardwaj. Globalisation. This study tries to find the ways and means to take India towards more inclusive pattern of Growth. Many macroeconomic variables indicate its flaws and consider it far away from what is known as Inclusive Growth.9% of India’s wealth which means that 90% of Indian poor have very less stake in India’s wealth.tbs2010@gmail. Bhaderwah Campus.5% in 2010-11.5% in the 1970s.3% and the top 10% have 52. This Economic Liberalisation has helped India to accelerate its growth rate to an average of 7% per year since 1997.6 billion. Key words: Liberalisation. University of Jammu. we have maintained a GDP growth rate of 8. With increase in the real GDP growth rate at 8. Privatisation. Jammu sunil. According to the world bank report. As a result of robust growth some economist are of the opinion that India and China will together act as an engine to drive the world economy. 67th in global hunger index. The top 1% of Indian population owns 15. Assistant Professor. Moreover India is now a major player in global trading system.Macroeconomic Analysis Of India’s Inclusive Growth Macroeconomic Analysis of India’s Inclusive Growth * Sunil Bhardwaj.6% in 2007-08 to 6.6% in the year 2010-11. But in spite of having two decades of prosperous growth the dark side of our economic development is clearly visible and that is what is reflected upon in this piece of research.9% of India’s wealth. 62nd in innovation efficiency index. The Business School. HDI. During the first quarter of 2011-12 (April-June 2011) export rose by 45. The effect of financial crisis was visible when our GDP growth rate plunged down from 9. Inclusive Growth. Expect during the economic crisis of 200708. India’s growth story has shown many magnificent results with many macroeconomic variables showing positive movement. Rohit Bhagat and Vinay Sharma Abstract: After the adoption of LPG policy by India in 1991.7% to $ 79 billion and import by 36. in 2004-05 about 37 crore people were poor but this figure rose to 38. 112th rank out of 134 nations in gender gap and is placed on 134th rank in HDI. These figures will remain a matter of concern to our policy makers and inclusive growth seems to be a mere dream.8% in 2008-09. up from 3. GHI. the top 5% own 38. the economy has moved closer to pre-crisis level.2% to $ 110.

The paper discuses about some variables like HDI. This means that rest 90% have less than half (47.5%).Macroeconomic Analysis Of India’s Inclusive Growth Inclusive Growth: Taking about inclusive growth. The main goal of inclusive growth is to feed. poverty. the top 5% own 38. are adequately shared by the poor and weaker sections of our society".9% of Indian’s wealth. Otherwise chances are there that country’s demographic dividend may turn into demographic liability. gender disparities. There are number of industries that are pushing country’s growth beside a number of economic reforms that are put in place time to time in the last two decades to make India a global figure at the global platform.7% and it seems as if we are in comfortable zone with respect to balance of payment. In a country like India having demographic dividend a big challenge is to bring 600 million rural people in the main stream. India has quite successfully liberalised its investments and it is a open fact that the its equity is ranked third in the world. Merely telling him that our economy is growing at rate of 9% per annum. foreign exchange reserves. Inclusive growth is necessary for sustainable development and equitable distribution of wealth and prosperity. SCs.3% and top 10% have 52. Objectives of Study: The objective of this study is to give a sceptical insight to the Indian’s growth story and to bring in focus the facts and figures which shows country’s high growth performance but not inclusive. Manmohan Singh says that India needs to "ensure that growth is widely spread so that its benefits. According to credit issue. However in Indian context and as perceived by eleventh five year plan (2006-07 to 2011-12) the integrated elements which can boost are grow are poverty reduction and increase in quantity and quality of employment.1%) of the share in the country’s wealth. clothe. CAN WE CALL THIS GROWTH AS INCLUSIVE GROWTH? A thirteen year old child begging on the road side with an empty stomach and no hope for future. The CIA World Fact Book lists India as the second most populated country with 17. educate and employ India’s growing population which is expected to reach nearly 1. in terms of income and employment.5 billion by 2030. National Conference on Emerging Challenges for Sustainable Business 2012 593 . social sector development. the Indian Prime Minister Dr. Still 50% of country’s poor belong to excluded sections of society i. During tenth five year plan our economy has accelerated with an average rate of 7. Rationale of Inclusive Growth: According to both World Bank and CIA India is ranked 4th largest economy worldwide. service sector growth. The oxford English dictionary gives another definition of it “a growth not excluding any section of the society”. Let me put it in other way inclusive growth is growth for the welfare of all”. 2012). So a well planned homework if done on these parameters can help us to make our growth story more inclusive in nature. poor quality delivery system and regional disparities. STs and OBCs who should also be given fair opportunity and support for their growth and development. agriculture development. the top 1% of the Indian population owns 15. global hunger index etc which play an important role for the overall development of an economy.e.9% of country’s wealth (Prarthna. hardly compensate for his empty stomach.5% of world population after china (19.

The research u e uses fact and figures alre d eady availab to analys ble se and exam these to make a crit mine o tical evaluati of the ma ion aterial. balance of pa e b ayment and per capita in ncome.1 Quartly growth rate (2 2010‐11) in  % Q1  Q2 Q3 Q4 Q1  Q2 Q Q3 National Conference on Emerging Challenges for Sustainable Business 201 C n C 12 . Data Collection: er ondary data collection te echnique for the collect r tion of data. W have use the platf We ed form quite s successfully as a result of which so ocioeconomic changes of the count are enorm try mous which has changed India and Indians. on ervations: Discussio and obse Economy of a countr depends m y ry mainly on fiv basic vari ve iables such a GDP. country’s economy has reached new heigh in the gl um d hts lobal contex xt. an technical k nd knowhow an to lure fo nd oreign indust tries towards large India market an s an nd customer with high expendable income. Reta ail sector co ontributes 1 14% to the nations G e GDP and em mploy 9% of populati ion in whic ch unorganised retail sector plays an important r n role. foreig gn exchange reserves. data and statistics com mpiled by in nstitutions an research j nd journals.1% in m ter n march 2011. infl as lation.8 7. The focu of reducin the barrier was to exp us ng rs pose the eco onomy to new technolog managerial w gy.7 6 6. inflation 5. Before the process of econom liberalisation start t mic ted the focus was to bring abou ut fundamen changes so as to m ntal s make domestic economic competent to the globa challenge c al es. and per capita income of rupees 5283 o r 9 d 35 per annu in 2010-11.6 8.9 6. skills. o Research Methodol h logy: The piec of researc is descri ce ch iptive and a analytical in nature. rves of US$ 327 billion $ n.5 7. forex reser . balance of payment surplus of rupees 59449 crores. The feature of this type o e f of research is to report things that have happened or are happening without hav t t ving much o of control o over these va ariables. repo and pub orts blications of organisation f n.1% i h wth in rd 3 quart of 2011-12. Wi the growt d ith th coming from all the sectors of the econom agricultu still play a dominan part in th f e my. The variou us The pape uses seco sources u used are rese earch public cations. ure ys nt he country’s growth and contributes 14% to Ind s d s dia’s GDP an employs 5 nd 52% of popu ulation. mag gazines.Macroecono omic Analysi Of India’s Inclusive Gro is I owth The pape examines and analyse important variables at micro and macro level showing th er es t t l he gap betw ween actual g growth of th country an the inclusive growth and to sugg ways an he nd gest nd means to make it more inclusive in nature. With GDP grow of 6.3 Quartly growth rate (2 2011‐12) in  % 7. GDP G Growth Rate e 8. Be rs e eside this 25 of Indian population is below th 5% n n he age of 30 years whic present a better rather than best op 0 ch b r pportunity f global pla for ayers for hig gh profits.

health and survival. This clearly shows that India’s HDI ranking still lag behind other medium human development countries such as Srilanka (0.450 Health Education 0. Germany and UAE. life expectancy at birth is 65. sanitation.392 and GNI per capita (PPPUS$) is 3468. 2011).682) and even Iraq having HDI value of 0.5 billion in 2010-11 mainly from Mauritius.617 (UNDP.687). China (0. education attainment. Indian economy was least hit by global financial crisis and it was one of the first to recover from it. political empowerment.Macroeconomic Analysis Of India’s Inclusive Growth Again large size of Indian market. Sex ratio of the country: Total Persons 914 Rural 919 Urban 926 National Conference on Emerging Challenges for Sustainable Business 2012 595 . education. Singapore. the intrinsic strength of Indian corporate and Indian’s well established and well functioning banking system are conducive to a sustainable inflow of foreign equity. However many macroeconomic variables do not support this growth story rather they call it as a pseudo growth.717 0.508 Human Development Index HDI Income Global gender gap report assesses gender equality in 134 countries which take into consideration economic participation and opportunity.547 0.547. This is a clear indication that besides having two decades of robust growth there is very little improvement in gender gap index. According to Human Development Index. Some integral elements of economic growth are not in favour of country’s this type of growth.4 years. information etc. education index is 0. This means poor access to essential services such as health. India’s HDI value is 0. inequality index is 0. Gender inequality index value of India is 0. Human Development Report. India has been ranked 112th out of 134 nations. Thailand (0. Inclusive growth means which is not exclusive.573.691).450. drinking water. USA. “ a growth far away from inclusive growth”. With GDP growth rate of 8. India has been classified in the medium human development category and is placed at 134th rank (According to UNPP.6 percent in 2010-11we have brought ourselve to precrisis level. As a result of this FDI inflow to India was US$ 3. Human Development Index 0. Human development report 2011). public distribution system.

75 Urban 79. fodder and raw material for a vast segment of industry which give it a separate status in the country’s growth story.82% Literacy rate of Bihar and same gap is found in rural and urban population.91% literacy rate of PERSON Total 74. Moreover this sector is the supplier of food. India’s ranking is the lowest even among BRIC nations.04%) but disparity in male literacy rate (82. the agriculture sector needs to grow at 8. the agriculture sector (including allied activities) recorded an average growth of 2. Moreover. Recent experience suggests that high GDP growth in the agriculture sector leads to inflation in the country which would destroy our growth process. Also India’s gender equality performance remains the worst in the region with Srilanka and Bangladesh getting 16th and 82nd ranking.57 Urban 89.14%) and female literacy rate (65.14 Rural 78. affecting the poor much. Agriculture is the main stay of Indian economy and it account for 14.5 percent during 2011-12. This sector employs 58.8 percent but next two years agriculture fell into negative zone with negative 0. In order to achieve the plan target of average 4 percent per year.98 MALE Total 82.91 Urban 84.67 FEMALE Total 65.2% of the country’s GDP in 2010-11 and 10.04 Rural 68.Macroeconomic Analysis Of India’s Inclusive Growth Sex ratio of the country (0-6 years): Total Persons 940 Rural 947 Urban 926 Although literacy rate of India is in comfortable zone (74.46 Rural 58. The first year (2007-08) of the plan ended with an impressive growth of 5. which seem to be a mere dream so the inclusiveness of country’s growth. National Conference on Emerging Challenges for Sustainable Business 2012 596 . there is disparity in literacy rate of different states with 93.92 Kerala and 63. During the first three years of the current five year plan. Literacy Rate of India (%) Decadal population growth (2001-2011) rate of country is 17. Despite the increase in growth in share. the contribution of agriculture in GDP is coming down.46%) is very prominent in Indian economy.03 percent against the target of 4 percent per annum.2% of the total workforce which make it even more prominent for inclusive growth (census 2011).1 percent in 2008-09.59% of the total exports.64% showing a big gap in the growth rate of urban and rural population.

Even after acknowledging these poor still an effect support is missing as a result of which poverty of STs has hardly declined in the last few years. Transparency international’s Corruption Index report 2011 places India on 95th rank with corruption perception index score 3.1 percent in Q3 of 2011-12 country. Due to this India is hovering near 100 mark in this important aspect of economic growth.5 percent to 32 percent from 2004-05 to 2009-10 but absolute number of poor have increased from 37 crore people to 38. STs and OBCs are still out of the main stream of the society. is still placed at 67th rank in Global Hunger Index which is worse even when compared with the rank of Nepal (56th). More recently the stability of the country is shaken by high inflation above 10%. India is also considered as one of the most corrupt nations of the world. It include three main hunger related indicators i. Russia (66th) and it is getting worse in comparison to China moving from less than 0.6 point. the prevalence of underweight in children and the mortality rate of children.00% 14. India. despite having robust economy growth with GDP growth rate of 6. Human Development Report 2011 Multidimensional Poverty Index of the country is 0.1 which is again alarming and is effecting the country’s long term as well as short term growth perspectives. Pakistan (52nd). National Conference on Emerging Challenges for Sustainable Business 2012 597 .5 crore people. On Global Competitive Index (56th) India continues to being rank at par with South Africa (50th). Nearly 50 percent of Indian poor belong to these classes of the society.283 which shows another loophole of our economy. According to reports percentage of poor people has decreased from 37. Not only this but macroeconomic environment (105th) continues to be characterised by large and repeated public deficit and highest debt to GDP ratio among BRICS. ICT and energy infrastructure are insufficient and ill adopted to the global business needs which are improving but at a very slower rate in comparison to other nations which are improving at much faster rate. Brazil (53rd).00% 2007‐08 2008‐09 2009‐10 2010‐11 % share of agriculture According to UNDP.1 to 0.00% 13.Macroeconomic Analysis Of India’s Inclusive Growth % share of agriculture 17.e.00% 15.00% 16. Country has performed on the poor front in the areas considered to be the basic factors for competitiveness. Srilanka (39th) and China (9th). Global Innovation Index places India on 62nd position in 2011 from 56th in 2010. The situation is even more astonishing when we look at Global Hunger Index which is developed by International Food Policy Research Institute (IFPRI). Supply of transport. Some sections of society like SCs. the proportion of undernourished in the population.

Central a assistance pr rogramme. National Conference on Emerging Challenges for Sustainable Business 201 C n C 12 . So. 7 mendations: Recomm Emergen of techn nce nology fatigu in the in ue ntensive irrig gated crop p production regions is th r he main rea ason of poor performan of agricu r nce ulture sector in the past decade. Jobs fo or BPL people.68 9. To achiev country’s inclusive growth good quality infra ve s g astructure is the most cri itical physical requirem ment for atta aining faste growth in a compet er n titive world and also for ensurin d ng investme in backward regions. ent SC.74 4 9. 6 7.22 10 9. Foreign investments in the form of FDI. NUR & Bhar vt. For allev viation of po overty prope stress on education. s to be effecti ive.55 6. SSA. 3 4. 1 2. to shape di istrict specif plan aft analysin the clima fic ter ng atic and ge eographical condition. 4 5. o of particular area supp r plemented by research in seed va b arieties and innovation of country’s agricultu in technology can hel to shape th future of country’s ag ure lp he griculture sector.06 9.47 6. FII & FPI is ve necessary for the cou i ery y untry and ac cts as an imp portant sour of long-t rce term as well as short-ter fund. Dismantling of barriers an l rm nd liberal po olicy in resp pect to thes must be a se adopted so as to lure th hem toward large India d an market. the Rashriya Krishi Vik Yojana (RKVY). ST and OBC po a opulation. special assistance schemes for w women. 5 6. and skill develo d opment in ur rban and rur ral nt. Beside th collabora his ating the se econdary sec ctor with the agriculture sector can give desire e e n ed thrust of profitability to the agric y culture sector r.95 6 2011 2012 1. RM rat Nirman f achieving Millennium developm for g m ment goal is v very necessa by makin them mor ary ng re result ori iented with p proper evaluation and mo onitoring me easures. gy innovatio with parti on icular focus on raising th yield is ve importan Moreover the focus t he ery nt. MGNERGS.46 7. s M .78 9. M Minorities a other exc and cluded grou also need certain ass ups d sistance sche emes to brin ng them into main stream o ms. So technolog r t o.54 9. 2 3.44 9. r er reservation o seats in g of govt. poor is very importan Remodel lling of gov initiated schemes like NRHM.87 9. m t a kas must be resu ult oriented and proper accountabili and align ity ning them with other gov Schemes can prove t vt. a particular attention m be give to them in terms of th reach of r r must en n he relevant sche emes in man ny sectors. w women and c children con nstitute 70% of the popu % ulation.Macroecono omic Analysi Of India’s Inclusive Gro is I owth 9. r. improvement in effectiveness of government programmes with poverty as main focus is very necessary for India. Planning Commission of 2.nic.html 5. planning commission of India as downloaded from agriculture.pdf 12. But it seems as if the main focus of the country is to increase the GDP growth rate and not to analyse the inclusiveness of this growth trajectory.aspx?id=1 13. Conclusion: Twenty years had passed since India had Balance of Payment crisis and the country is doing fairly well in many sectors. www. economic reforms. International Food Policy Institute. Challenges before inclusive growth in India by Prarthna Baranwal.html National Conference on Emerging Challenges for Sustainable Business 2012 599 . Human Development 10. an approach to the 11th five year plan. collaborating secondary sector to the primary sector. Remodelling of government http://investorzclub.ifpri. fiscal deficit discipline. 9. to bring in vulnerable population into the main stream. 3. World Economic Forum. The Indian Government's 2102 economic survey. http://www. Ministry of Commerce.nic. http://planningcommission.undp.planningcommissionofindia.globalinnovationindex. quality infrastructure. 4. Webliography/ Bibliography/ References: 1. dismantling of barriers for foreign investment. The Global Innovation Index Report 2011. http://cpi.cfm 11.http://hdrstats.transparency. Central Statistical Office http://mospi. judiciary) keeping in view all the sectors and sections of the society can help us achieve what is known as inclusive growth.weforum.Macroeconomic Analysis Of India’s Inclusive Growth 8. Towards faster and more inclusive growth. The focus of government aids also need to be directed towards rural 7. monetary.nic. Our study tries to highlight the areas which are of utter importance for the inclusive growth of India like poverty. Transparency International. Data and Statistics from Reserve Bank of India.pci. http://www.aspx?status=1&menu_id=14 Economic reforms related to banking or macro polices (fiscal.blogspot. education. health and social welfare through government spending. Ministry of Statistics and Programme Implementation. http://commerce. trade.