INCLUSIVE GROWTH AND

HOW TO ENSURE IT

IntroductionWhat is inclusive growth?

Need for Inclusive Growth

Elements of Inclusive GrowthFive interrelated elements of inclusive

growth.Poverty Reduction and increase in quantity

and quality of employment Agricultural DevelopmentSocial Sector DevelopmentReduction in regional disparitiesProtecting 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 3211983 3231993-94 3202004-05 302

Determinants of Rural PovertyAgricultural GrowthRelative food pricesRural non-farm sectorRural wagesGovernments’ development expenditureInfrastructureHuman Development

Policies for Poverty AlleviationIndia adopted two pronged approachGrowth approachDirect approachSelf employment programPublic Distribution SystemNational Rural Employment Guarantee Scheme

(NREGS)

Problems in EmploymentShare 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 AgricultureDeceleration in growthLand and water problemsDisparities in growthLong term factors

Goals Of Agricultural DevelopmentAchieve growth in agriculturesharing growthmaintain sustainability of agriculture

Deficits in Agriculture GrowthSix deficits in agriculture land and water management deficitinvestment, credit and Infrastructure

deficit,research and extension (technology)

deficit,market deficit, institutions deficit,education/skill deficit

Social Developmenteducation and healthnutrition

Regional DisparitiesSignificant Regional Disparities in IndiaPer capita incomeFemale infant mortalityFemale literacyCauses for disparities;Investment in physical and human capitalTechnologyInstitutions including governance

EnvironmentDegradation of land, water. Increase in

pollution levelsChallenges of climate changeConsumption patterns of rich

What Should be done to improve inclusive growth?Equity is important for economic developmentAgricultural DevelopmentEconomic 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 TechnologyShift focus of reforms to delivery systemsImportance of women’s economic and social

empowermentDecentralizationEconomic reforms in relation to socio-

political environmentRights 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.

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