INCLUSIVE GROWTH STRATEGY

WHAT IS INCLUSIVE GROWTH?

▪ Inclusive growth means economic growth that creates employment
opportunities and helps in reducing poverty.
▪ It means having access to essential services in health and education by
the poor. It includes providing equality of opportunity, empowering people
through education and skill development.
▪ It also encompasses a growth process that is environment friendly
growth, aims for good governance and helps in creation of a gender
sensitive society.
▪ As per OECD (Organisation for Economic Co-operation and
Development), inclusive growth is economic growth that is distributed
fairly across society and creates opportunities for all.

Inclusive growth basically means “broad-based growth, shared growth, and pro-poor
growth”. As an approach in economic policy, it is believed to decrease the rapid growth rate
of poverty in a country and increase the involvement of people into the growth process of
that country. Inclusive growth by its very definition implies an equitable allocation of
resources with benefits incurred by every section of society. But such allocation of resources
must be focused on the intended short- and long-term benefits of that society, such as
availability of consumer goods, people access, employment, standard of living, etc. It also
sets a direct relationship between macro and micro determinants of the economy and
economic growth. The micro dimension includes the structural transformation of the
society, while the macro dimension includes the country’s gross (GNP) and gross domestic
product (GDP).
The 11th Plan defines inclusive growth to be “a growth process which yields broad-based
benefits and ensures equality of opportunity for all”.
The inclusiveness involves four attributes. They are Opportunity, capability, access and
security.
The Opportunity attribute focuses on generating more and more opportunities to the
people and focuses on increasing their income. The Capability attribute concentrates on
providing the means for people to create or enhance their capabilities in order to exploit
available opportunities. The Access attributes focuses on providing the means to bring
opportunities and capabilities together. The Security attribute provides the means for
people to protect themselves against a temporary or permanent loss of livelihood.
NEED FOR INCLUSIVE GROWTH
WHY IS INCLUSIVE GROWTH STRATEGY NECESSARY ?
Inclusive growth is necessary for sustainable development and equitable distribution of
wealth and prosperity . Achieving inclusive growth is the biggest challenge in a country like
India. In a democratic country like India, bringing 600 million people living in rural India into
the mainstream is the biggest concern.

Inclusive growth is tremendously determined on the trend and extent of disparity,

particularly about the regional inequality. Reducing poverty, improving the quality of
life, and ensuring that all parts of the society benefiting from the economic growth of
the country is the primary motive of an inclusive growth plan.

The following are the need for India to focus more on inclusive growth.

1. India is the 7th largest by area and 2nd by population and 12th largest economy at
market exchange rate. Yet, India is away from the development.

2. Low agriculture growth, low quality employment growth, low human development,
rural-urban divides, gender and social inequalities, and regional disparities etc. are
the problems for the nation.
3. Reducing poverty and inequality and increasing economic growth are the main
aim of the country through inclusive growth.

4. Political leadership plays a vital role in the overall development of the country
which is not sustainable.

5. Corruption is one of the problems that prevent inclusive growth.

6. Literacy levels have to rise to provide the skilled workforce required for higher
growth.

7. Accomplishment of highest GDP growth for country is one of the boosting factors
which give the importance to the Inclusive Growth in India.

REASON FOR INDIA TO EMBRACE INCLUSIVE GROWTH:

The recognition of the significance of inclusive growth in developing Asia have
been generated by a rising concern that the benefits of remarkable economic
growth have not been equitably shared. Developing India experienced rapid
economic growth during the last two decades. Asia’s rapid growth has led to
dramatic reduction in the level of extreme poverty. Using the $1-a-day poverty
line established by the World Bank in 1990, the incidence of extreme income
poverty declined from 43.5% to 35.00% between 1990 and 2005, with each
percentage point of growth related with an almost 2-percentage point decline
in poverty incidence on average (ADB 2004c). Most Asian countries
accomplished the income poverty target of the Millennium Development Goals
(MDGs) by 2005 for except those in South Asia.

IMPACTS OF AN INCLUSIVE GROWTH

The anticipated development impacts of inclusive growth are increasingly present in
donor policy thinking and global dialogues, including the post-2015 Sustainable
Development Goal framework. The desired impacts range from economic benefits to
other development goals, social cohesion and sustainable peace.

Some of these impacts from inclusive growth include:

Economic growth, productivity and employment

 ▪ There is mounting evidence of the impact of inclusive growth
approaches on reducing poverty and inequality, when excluded groups
gain greater access to education, employment and business
opportunities.

▪ Equality can promote economic growth, with positive impacts on macro-

level growth, human capital and labour agricultural productivity.

▪ Extending services may boost economic growth but few in-depth case
studies look at this. A small evidence base shows that participatory
development projects more broadly have limited impact on income
poverty.

Other development outcomes, including wellbeing

▪ Limited and inconsistent evidence exists on the impact of voice,

empowerment and accountability approaches on broad development
outcomes.

▪ Women and girls’ education and economic empowerment has

contributed to postponed marriage, lower fertility and improved health
and education outcomes for future children.

▪ In-depth qualitative case studies demonstrate strong positive effect of

efforts to make services more inclusive and improve progress towards
the Millennium Development Goals, benefiting broader society.

Social cohesion, peace and state-building

▪ There is research pointing to the positive relationship between peaceful

societies and more inclusive states with state-society relations based on
legitimacy rather than coercion, and greater associational life that
generates trust and inter-group cohesion.

▪ Evidence suggests inclusive political settlements and broader political

processes are essential for fostering peaceful societies. Inconclusive
evidence exists on whether more inclusive peace processes and
agreements make political settlements more inclusive and/or more
sustainable.

▪ There is little robust evidence of the causal connections between

gender-inclusive interventions and peacebuilding and state-building
goals.
ADVANTAGES OF INCLUSIVE GROWTH

• Lower incidence of poverty.

• People’s standard of living will increase- It reduces poverty and this allows
them to get essential goods for living. If people have high income, they can
consume more luxury goods and stimulate aggregate demand. This
encourages firms to produce more and this will then increase the potential
output level in the economy. When the income and output rises, the tax
revenue will also rise without increases in tax rates . The government then can
spend more money to improve the public services, such as education and
health care and this will then improve the standard living of people.

• Broad-based and significant improvement in health outcomes.

• Universal access for children to school.

• Increased access to higher education and improved standards of education,

including skill development.

• Better opportunities for both wage employment and livelihood.

• Improvement in provision of basic amenities like water, electricity, roads,

sanitation and housing.

• Employment rates will rises- If the employment rate rises, the government`s
expenditure on paying people’s welfare for being unemployed will then
decrease. Hence, the government can spend a large amount of money to
enhance the quality of the public services.

So we can say that, Inclusive growth perfectly facilitates the stability and
development of the global economy. It will also add new impetus and vitality,
providing new room for economic growth.

MAJOR CAUSES FOR LESS INCLUSIVE GROWTH:

There are several reasons for disrupting inclusive growth. Firstly, growth has
been jobless, and the employment growth has declined for the same level of
economic growth. Despite of remarkable growth which has made India the
world's fourth biggest economy, "employment in different sectors has not
been rising. This jobless growth in recent years has been accompanied by
growth in casualization".
Secondly, growth has been uneven across sectors and locations. For instance,
agriculture has been lagging behind and in countries such as India and China,
some regions have advanced faster than others. Policies are also relatively
ignored the agriculture sector.
Third is the rapid rate of globalisation. Due to trade competitiveness, foreign
direct investment and new technologies has demanded skilled labour. In some
cases, labour laws also often discriminate against formal employment and
encourage 'casualization' of labour.

LEADING ADVANCED ECONOMIES ACCORDING TO THE

INCLUSIVE DEVELOPMENT INDEX
This statistic shows the leading advanced economies according to the 2018 edition of
the World Economic Forum's Inclusive Development Index. Countries are given a score
from one to seven, with higher scores translating to greater inclusivity in that economy.
In 2018, the most inclusive economy was Norway with a score of 6.08.
ELEMENTS OF INCLUSIVE GROWTH:
Major components of the inclusive growth strategy included a sharp upsurge in
investment in rural areas, rural infrastructure and agriculture spurt in credit for
farmers, increase in rural employment through a unique social safety net and a
sharp increase in public spending on education and health care.
There are several interrelated elements of inclusive growth:
• Poverty Reduction
• Employment generation and Increase in quantity & quality of
employment.
• Agriculture Development
• Industrial Development
• Social Sector Development
• Reduction in regional disparities
• Protecting the environment.
• Equal distribution of income.

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

▪ As 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% totaling the total
unemployment rate at 6.1%.
▪ The quality and quantity of employment in India are low due to illiteracy 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

o A slow reduction in the share of employment
o Low labour productivity
o Decline in agriculture yield due to climate change, land
degradation and unavailability of water
o Disparities in growth across regions and crops
Issues with Social Development

▪ Social development is one of the key concerns for inclusive growth. But it is
facing some problems such as:

o Significant regional, social and gender disparities

o Low level and slow growth in public expenditure particularly in
health and education
o The poor quality delivery system
o Social indicators are much lower for OBC, SC, ST, and Muslims
 o Malnutrition among the children - India ranks 102nd in Global
Hunger Index
Regional Disparities

▪ Regional disparities are a major concern for India. Factors like the caste
system, gap between rich and poor etc. contribute to the regional disparities
which create a system where some specific groups hold more privileges over
others.
▪ Some of the regional disparities problems are as follow:

o In terms of literacy rate, Kerala is the most literate state with 93.1%
literacy, on the other hand, literacy rate of Bihar is only 63.82%
o In terms of per capita income, Goa's per capita income is Rs
4,67,998 in 2018 while per capita income of Bihar is just one-tenth
of that ie Rs 43,822

MEASURING INCLUSIVE GROWTH

Inclusive Development Index (IDI)

▪ In the Inclusive Development Index (IDI) compiled by the World Economic

Forum (WEF), India ranked 62nd out of 74 emerging countries and was among
the least inclusive countries in Group of 20 (G-20) countries.
▪ The IDI is based on the idea that most people base their country’s growth not
on GDP but by their own standard of living.
▪ It gives a measure of inequality based on three parameters: :

o Growth and development

o Inclusion
o Inter-generational equity and sustainability.
Social Progress Index (SPI)

▪ It is an aggregate index of social and environmental indicators which

includes the following:

o Basic human need

o Foundation of well being
o Opportunity
MEASURES TAKEN INDIA TO ACHIEVE INCLUSIVE
GROWTH
▪ Several schemes are being implemented by the government for inclusive
growth which includes the following:

o Mahatma Gandhi National Rural Employment Guarantee Act

Scheme (MGNREGA)
o Prime Minister’s Employment Generation Programme
(PMEGP)
o Mudra Bank scheme
o Pt. Deen Dayal Upadhyaya Grameen Kaushalya Yojana
(DDU-GKY)
o Deendayal Antyodaya Yojana- National Urban Livelihoods
Mission (DAY-NULM)
o Sarva Siksha Abhiyan (SSA)
o National Rural Health Mission (NRHM)
o Bharat Nirman
o Swachh Bharat Mission
o Mission Ayushman
o Pradhan Mantri Jan Dhan Yojana
▪ Government is working with NGOs and International groupings in policy
making eg:

o DISHA Project is being implemented in partnership with

UNDP for creating employment and entrepreneurship
opportunities for women in India.
▪ NITI Aayog's Strategy for New India @75 has the following objectives for
the inclusive growth:

o To have a rapid growth, which reaches 9-10% by 2022-23,

which is inclusive, clean, sustained and formalized.
o To Leverage technology for inclusive, sustainable and
participatory development by 2022-23.
o To have an inclusive development in the cities to ensure that
urban poor and slum dwellers including recent migrants can
avail city services.
o To make schools more inclusive by addressing the barriers
related to the physical environment (e.g. accessible toilets),
admission procedures as well as curriculum design.
o To make higher education more inclusive for the most
vulnerable groups.
o To provide quality ambulatory services for an inclusive
package of diagnostic, curative, rehabilitative and palliative
care, close to the people.
o To prepare an inclusive policy framework with citizens at the
center.
CASE STUDY 1: COLLECTIVE IMPACT IN THE UK – THE WEST
LONDON ZONE
The West London Zone aims to help support students to remain engaged and
motivated through their education – and promote inclusive growth through
the prevention of exclusion. It originated from the idea that it is possible to
create ‘civic zones’ and focus resources on a particular area or around a
specific place-based initiative. The Zone brings together multiple
commissioners to support a broad range of positive outcomes for children and
young people, having established that multiple organisations were providing
support but that it was not sufficiently coordinated.
Financial model
The WLZ was initially piloted with £600,000 of support from a group of six
foundations/trusts with additional support from Big Lottery Fund for pilot
phase.
The WLZ’s financial model is now based on payment-by-results, allowing local
authorities to fund the initiative based on outcomes for student; if the WLZ
achieves successful outcomes for 300 pupils that will unlock £3 million of
funding. WLZ has used local authority investment to leverage funding from
other stakeholders. Local authorities and schools both provide a third of WLZ
funding, the philanthropic sector provides a fifth, while central government
and the Big Lottery Fund make it the remainder. The collective impact bond is
underwritten by the City Bridge Trust/Bridge Fund Management.

CASE STUDY 2: CONGESTION CHARGING IN LONDON

Taxing congestion raises revenues for London while changing behaviour,
making it an efficient form of taxation, and one ideal for large cities.
London’s Congestion Charge (CC) is an £11.50 daily charge for driving a vehicle
within the central London charging zone between 07:00 and 18:00, Monday to
Friday. There is an ongoing debate about extension of London’s congestion
charge and ways to improve it.30
Revenue generation and investment31
The CC will raise £174 million net in 2017/18 – 3 per cent of Transport for
London’s (TfL) operating income, and 21 per cent of non-fares operating
income. This does not include the revenue raised by encouraging people to
ride public transport.
£75 million (43 per cent of revenue from the CC) is spent on TfL’s bus network.
Impacts
The CC raises most of its revenue from individuals in the richest quintile, who
are more likely to commute by car. The overall impact is disproportionately
progressive as it expanded and subsidises public transport used most by low
income residents.32
Traffic fell by 21 per cent between 2002 and 2008, while delays fell by 30 per
cent and public transport usage increased 18 per cent over the same period.33
Environmental benefits included a 16.4 per cent decrease in CO2 and 13.4 per
cent decrease in NOx in the first year.34
Public support was initially low and declined prior to introduction of the CC,
but rose following its implementation (a pattern also seen in international
cities with road pricing). The percentage of Londoners opposed to it fell from
72 per cent to 36 per cent five years after its introduction. 35

CONCLUSION:

• Indian government along with the state governments and local governments
should continue to focus on eradicating poverty and achieving sustainable
development in order to improve the lives of India's people.
• Through innovative partnerships with an international organization, civil
societies, and private companies, inclusive and equitable growth can be
targeted.
• Inclusive growth will help in the empowerment of vulnerable and
marginalized populations, improve livelihoods, and augment skill-building for
women
India has been enriching with some of the world’s most essential minerals, beautiful places,
diverse cultures and capable and talented people. It is time we stop squandering and take
advantage and make the most of what most countries can never even dream to have. There
is much to be done, but if done and done correctly, then nothing can stop us from reaching
the pinnacle of the world. Thus the time now is to take quick action towards Inclusive India
and we should all join hands in achieving the target of inclusive growth and developing our
service sector will help us in achieving this objective which is the need of the hour so let us
work at it. To add to it that the services led growth in India would be rapid and sustainable
in the long run if both agriculture and industry grow at a rapid rate.

BIBLILOGRAPHY

https://www.drishtiias.com/to-the-points/paper3/inclusive-growth-1
https://cafod.org.uk/content/download/17223/133621/file/Inclusive%20Growth%20
full%20paper.pdf
https://www.civilserviceindia.com/subject/General-Studies/notes/inclusive-growth-
and-issues-arising-from-it.html
https://www.centreforcities.org/case-study-library/inclusive-growth-case-studies/
www.nevillewadia.com
https://gsdrc.org/publications/benefits-to-society-of-an-inclusive-societies-
approach/
https://www.econstor.eu/handle/10419/71821