Inclusive growth and issues arising from it

Inclusive growth has been defined differently by different organizations and scholars. The dictionary meaning of the term “inclusive” is “comprehensive”, “including all extremes” and “not excluding any section of the society”.

UNDP has defined inclusive growth as “the process and the outcome where all groups of people have participated in growth and have benefited equitably from it”. This implies that inclusive growth should include all sections as beneficiaries as well as partners in growth and that inclusion of the excluded should be embodied in the growth process.

Basely et el (2007) defined inclusive growth as the “growth that has a high elasticity of poverty reduction”, i.e.  it should have a higher reduction in poverty per unit of growth.

In summary, Inclusive growth is the growth that reduces disparities among per capita incomes in agriculture and non-agriculture, in rural and urban areas, and in different socio-economic groups, particularly between men and women and among different ethnic groups. The result of inclusive growth is reduction in vertical inequalities (individual inequalities) and horizontal inequalities (group inequalities).

Salient Features of Inclusive Growth

The growth is inclusive growth when it is socially inclusive, regionally balanced, which enables every state to do better than in the past, which narrows the gap between different communities, which also brings in our concern for gender equality, upliftment of women, improving their educational condition and social status. The key features of Inclusive growth are as follows:

• Economic growth is a precondition for inclusive growth, though the nature and composition of growth has to be conducive to inclusion.
• Inclusive growth is to include the poor and lagging socio-economic groups such as ethnic groups, weaker sections as well as lagging regions as partners and beneficiaries of economic growth.
• The Inclusive growth addresses the constraints of the excluded and the marginalised. It has to open up opportunities for them to be partners in growth.
• Inclusive growth should be non-discriminatory and favourable for the excluded. This implies that inclusive growth has to be broad-based in terms of coverage of regions, and labour-intensive in terms of creating large-scale productive employment opportunities in the economy.
• Inclusive growth is expected to reduce poverty faster in the sense that it has to have a higher elasticity of poverty reduction.
• Inclusive growth has to ensure access of people to basic infrastructure and basic services/capabilities such as basic health and education. This access should include not only the quantity, but also quality of these basic services.
• Inclusive growth should reduce vertical as well as horizontal inequalities in incomes and assets.

Theoretical Aspects in Inclusiveness Growth

Inclusive growth is a Multi-dimensional Concept

Inclusive growth is understood as a multi-dimensional concept that facilitates inclusion from a variety of fronts that include:

• Increase of employment;
• Elimination of poverty;
• Elimination of discrimination
• Elimination of horizontal and vertical inequalities
• Promotion of access to a variety of public resources and institutions.

Basic idea is that the fruits of rapid economic growth should be widely shared, particularly by the poor and marginalised segments of society. Even if the rates of economic growth are high, that is, even if the cake is growing rapidly in size, nothing will trickle down to those who are not involved in the growth process either as entrepreneurs or employees, because of lack of appropriate capabilities. This is why the state has to intervene and orchestrate an inclusive growth path.

Inclusive Growth is an Utopia

The concept of inclusive  growth is basically a utopian concept. This is because inclusive growth is based on the assumption of equitable allocation of resources and benefits  accruing  to every section  of society, but perfect equality cannot be found anywhere.

However, the practical idea is to keep inequality into tolerable limits. Even bringing inequality within tolerable limits cannot be achieved overnight. Thus, the goal of inclusive growth needs to be a medium-long-term goal, as it takes time to include the excluded. However, the processes of such growth should start in the short run, as the medium-term goals have implications for short-term processes and activities.

Inclusive growth should be reflected in better opportunities for both wage employment and livelihood and in improved provision of basic amenities such as water, electricity, roads, sanitation and housing.

Inclusive Growth is beyond reducing poverty

There are several aspects of inclusive growth, the key aspects being adequate flow of benefits to the poor and the most marginalised. However, inclusive growth also involves group equality, regional balance, gender balance and social / economic empowerment. The poor are certainly one group, but inclusiveness must also embrace the concern of other groups such as the Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Minorities, differently-abled and other marginalised groups. Women can also be viewed as a disadvantaged group for this purpose. Further, regional balance aspect of inclusiveness relates to whether all regions, are seen to benefit from the growth process. An important constraint on the growth of backward regions in India is the poor state of infrastructure, especially road connectivity, schools and health facilities and the variability of electricity, all of which combine to hold back development. Improvement in infrastructure must therefore be an important component of any regionally inclusive development strategy.