Inclusive growth

Dr. Pabitra Kumar Jena and Sehin Gupta
Now-a-days inclusive growth is a buzz word which has been used widely in a large number of emerging and developing countries in the context of the neo-liberal policy framework, which is expected to deliver growth, and also inclusive growth. Empirical evidence from most of these countries however indicates that the neo-liberal policies have not been very successful in including the excluded in the mainstream development process. The concept of Inclusive growth has gained wide importance in several countries including India. The term “Inclusive growth” was made popular by the India Development Policy Review 2006 titled “Inclusive Growth and Service Delivery: Building on India’s Success”. Inclusive growth as the literal meaning of the two words refers to both pattern and pace of economic growth. For many years, people have not seen a rise in their income. The gap between rich and poor has been increased with those at the top capturing “lion’s share” of growth. “Lion’s share of growth” refers to the larger part of something. The increase in inequality in earnings and in wealth is a major concern but money is just one aspect of people’s well being. Inclusive Growth is economic growth that creates opportunities for all segments of population and distributes the dividends of increased prosperity in both monetary and non-monetary terms fairly across the society. Rapid pace of growth is undoubtedly required to reduce the poverty but for this growth to be sustainable in long run , it should be broad based and include large part of the country’s labor force.
Inclusive growth refers both to the pace and pattern of growth, which are considered interlinked, and therefore in need to be addressed together. The idea that both the pace and pattern of growth are critical for achieving a high, sustainable growth record, as well as poverty reduction, is consistent with the findings in the Growth Report: Strategies for Sustained Growth and Inclusive Development. Ever since the inception of the era of economic reform, the Government of India (GOI) has claimed to have made conscious efforts to protect the interests of the deprived by pursuing “Adjustment with a Human Face”. The progress towards inclusiveness is more difficult to assess, because inclusiveness is a multidimensional concept. Inclusive growth should result in lower incidence of poverty, 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, needs of the SC/ST and OBC population, women and children constitute a group which accounts for 70% of the population and deserves special attention in terms of the reach of relevant schemes in many sectors, physically challenged / minorities and other excluded groups also need special programmes to bring them into the mainstream.
To achieve inclusiveness in all these dimensions requires multiple interventions, and success depends not only on introducing new policies and Government programmes, but on institutional and attitudinal changes. Policies for Inclusive growth are an important component of most government strategies for sustainable growth. For instance, a country that has grown rapidly over a decade, but has not seen substantial reduction in poverty rates may need to focus specifically on the inclusiveness of its growth strategy, i.e. on the equality of opportunity for individuals and firms. The Inclusive Growth and Development Report 2015 report recognizes that inclusive growth is a complex and multidisciplinary process – to replace widespread poverty with ever increasing middle class prosperity, many conditions need to be fulfilled. India has been ranked very low, mostly in the bottom half, globally on most of the parameters for inclusive growth and development even as she fares much better internationally when it come to business and political ethics. India’s overall place in the Global Competitiveness Index 2014-2015 rankings is 71 out of 144 countries. The WEF(World Economic Forum) summit India is scheduled to be held on 6th and 7th October, 2016 . The theme of this year’s annual meeting would be fostering an inclusive India through digital transformation, Leaders from business, Government, civil society, NGOs and academia would be participating in the summit, being organized in partnership with the Confederation of Indian Industry (CII). These people will explore how to collectively shape policies for inclusive growth and harness the Fourth Industrial Revolution – a technological revolution .
Analysts have tried to define “Inclusive Growth” in terms of what it is not. It is a common saying that growth can’t be inclusive unless the problems of unemployment and underemployment are tackled head on. The inclusive growth definition is in line with the absolute definition of pro-poor growth, but not the relative definition. Under the absolute definition, growth is considered to be pro-poor as long as poor people benefit in absolute terms, as reflected in some agreed measure of poverty.  In contrast, in the relative definition, growth is “pro-poor” if and only if the incomes of poor people grow faster than those of the population as a whole, i.e., inequality declines. The concept of “Inclusive” in Inclusive Growth is seen as a process of including all those excluded persons whose participation is very crucial in designing the development process. Inclusive Growth allows people to “contribute to and benefit from economic growth”. Inclusive Growth as a strategy of “Economic Development” gained attention owing to a rising concern that the benefits of economic growth have not been equitably shared. Growth is inclusive when it creates economic opportunities along with ensuring equal access to every person. Apart from addressing the issue of inequality, the inclusive growth may also make the poverty reduction efforts more effective by explicitly creating productive economic opportunities for the poor and vulnerable sections of the society. Inclusive growth basically means making sure everyone is included in growth, regardless of their economic class, gender, sex, disability and religion. Sustainable economic growth requires inclusive growth. Maintaining this is sometimes difficult because economic growth may give rise to negative externalities, such as a rise in corruption which is a major problem in developing countries.  Negative externalities occur when production or consumption of a good causes a harmful impact on third party.
The Report of the Committee on Financial Inclusion (2008) advocated the effective improvement within the existing formal credit delivery mechanism, leveraging on technology based solutions, financial literacy and credit counseling, extensive support of micro finance institutions for enhancing the outreach of micro finance to micro, small and medium enterprises and recommended to set up the National Rural Financial Inclusion Plan. Considering the importance of financial inclusion, the proposed research strongly advocates the financial inclusion as an important dimension of inclusive growth. Inclusive growth cannot come without financial inclusion and enabling people to get credit from small money lenders. Inclusive growth raises the pace of growth and enlarges the size of the economy by providing a level playing field for investment and increasing productive employment opportunities. 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 a helps in creation of a gender sensitive society.
(The author are  Assistant Professor and  M. Sc. (Economics) Student, Department of Economics, Shri Mata Vaishno Devi University, Katra, Jammu & Kashmir.)
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