Q. It is argued that the strategy of inclusive growth is intended to meet the objective of inclusiveness and sustainability together. Comment on this statement.
According to the World Bank, Inclusive Growth (IG) refers to ‘broad-based’, ‘shared’, and ‘pro-poor growth’. It encompasses both the pace and pattern of growth, which is considered interlinked and therefore needs to be addressed together. Inclusiveness, on the other hand, is a concept that encompasses equity, equality of opportunity, and protection in market and employment transitions and is therefore an essential ingredient of any successful growth strategy.
▪️Rapid pace of growth is unquestionably necessary for substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors, and inclusive of the large part of the country’s labour force.
✔️ Thus, IG focuses on productive employment rather than income redistribution as a means of increasing incomes for excluded groups. Also, the focus is not only on incremental productive employment growth but also on productivity growth.
▪️ Growth can be ‘inclusive’ and “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. By focusing on inequality, the inclusive growth could lead to optimal outcomes for both poor and non-poor households.
Sustained, high growth rates and poverty reduction, however, can be realized only when the sources of growth are expanding, and an increasing share of the labour force is included in the growth process in an efficient way i.e. growth associated with progressive distributional changes will have a greater impact in reducing poverty than growth which leaves distribution unchanged.
▪️ The inclusive growth approach takes a longer-term perspective, where it is important to recognize the time lag between reforms and outcomes. Inclusive growth analytics is about policies that should be implemented in the short run, but for sustainable, inclusive growth in the future.
✔️For Example: The lag between the time when investments in education are made and the time when returns from improved labour skills are realised- this implies that the growth analysis must identify future constraints to growth that may not be binding today, but that may need to be addressed today in order to ensure sustainable and inclusive growth.
▪️Sustainable development should be followed wherein we should not only be inclusive with respect to people but also bring the environment in its inclusion thus causing minimum depletion of resources and going for a circular economy.
In the past few years, the government is aggressively focusing on the strategy of inclusive growth in its various programs and policies.
✔️For Example, Jan Dhan Yojana has focused on incorporating the unbanked masses into the financial sector and has increased financial inclusion statistics to more than 80%.
In the last few decades, India’s growth story has been phenomenal but the outcomes of this growth were not visible on the ground as India has performed badly in several social indicators as well as Human Development Index. Therefore inclusive growth is the idea to realize the dream of sustainable and qualitative development for present and future generations.