Inclusive growth is defined as “process and outcome where all groups of people have participated in growth and have benefited equitably from it” (UNDP). Inclusive growth has much wider scope than welfare approach.
Welfare approach focusses on outcomes (Income redistribution) through tax policies and enhanced expenditure for welfare of poor people. However, Inclusive growth focusses on outcomes (Income redistribution) as well as process (creating opportunities through Job creation, human capital formation etc.) Hence, inclusive growth incorporates sector-specific, people-specific, gender-specific, region-specific policies to ensure that poor people participate in the growth and get equitably benefit from it.
India has made rapid strides in its economic growth wherein the GDP size has increased from $ 275 bn in 1991 to $ 2.7 trillion in 2019. It is also considered to be the fastest growing major economies across the world. However, such a growth model has failed to promote balanced, equitable and inclusive growth.
Reasons for lack of balanced & inclusive growth:
- Problems with Poverty Eradication Programs such as poor identification of beneficiaries, presence of ghost beneficiaries, poor allocation of finances, poor implementation, large scale corruption and lack of transparency and accountability. For instance, according to the NSSO report, around 40-60% of the food grains do not reach the beneficiaries due to diversion of food grains and black marketing.
- Employment: The higher economic growth in India has not translated into higher employment opportunities leading to jobless growth. According to various estimates, the employment elasticity in India has remained quite low at 0.1.
- Agricultural Development: The increase in the input costs, decrease in the agricultural productivity accompanied by decrease in the prices received by the farmers on the agricultural produce has led to fall in the income levels of the farmers. According to the NSSO estimates, the average monthly income of the agricultural household is around Rs 6500 whereas their average monthly expenditure is around Rs 6250.
- Equitable Distribution of Income: As per Credit Suisse, 1% of the wealthiest in India have increased their share in wealth from 40% in 201o to 60% in the last five years.
- Provision of basic services: India's expenditure of 3% on education is much below the target of 3%. Similarly, expenditure on health has remained quite lower at 1.3% as against the mandated 3%.
- Balanced Regional Development: Some of the states such as Maharashtra, TN, Punjab etc. have made rapid progress on account of historical, geographical and economic factors. However, the states in the Northeast and Eastern India continue to have lower growth rates. Similarly, even within the states, there are certain pockets of underdeveloped regions such as Vidarbha (Maharashtra), Saurashtra (Gujarat), Hyd-Kar region (Karnataka) etc.
- Environmental Destruction: The extreme weather events such as cyclones, droughts, floods etc. would have a much higher impact on the poor and vulnerable sections such as SCs, STs, Women etc.
Way forward for balanced & inclusive growth:
The Government has to realize that "Ease of Living" is much wider and comprehensive as compared to "Ease of Doing Business". Ultimately, Gandhi's philosophy of putting the last man first should be the sole guiding light for the government's policies.