Inclusive growth is economic growth that is distributed fairly across society and creates opportunities for all. The definition of inclusive growth entails direct connections between macroeconomic and microeconomic economic factors and economic growth. The microeconomic dimension captures the significance of structural transformation for economic diversification and competition, whereas the macroeconomic dimension refers to changes in economic aggregates such as gross national product (GNP) or gross domestic product (GDP), total factor productivity, and aggregate factor inputs.

Salient Features

• Economic growth acts as a precondition for inclusive growth, though the nature and composition of growth have to be in line with inclusion.
• Inclusive growth is the inclusion of the poor and lagging socio-economic groups i.e. ethnic/ tribal groups, weaker sections as well as lagging regions as partners and beneficiaries of economic growth.
• The Inclusive growth addresses the limitations of the excluded and the marginalized. It creates ample opportunities and possibilities for them to be partners in growth.
• It should be non-discriminatory and favorable for the excluded. This implies that inclusive growth has to be broad-based in terms of coverage of regions, and labor-intensive in terms of creating large-scale productive employment opportunities in the economic environment.
• Inclusive growth has the ability 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 healthcare and elementary education. This access should ensure quality as well as quantity of these basic services.
• Inclusive growth should reduce vertical as well as horizontal discrepancies in incomes and assets.

Inclusive Growth in India

Over the last 15 years, India has made remarkable progress in terms of economic growth, with more than 271 million people lifted out of poverty. High growth rates, on the other hand, have not translated into equitable development, especially for the most marginalised and disadvantaged communities. Further, the COVID-19 pandemic has resulted in widening of inequities and reversed the progress made in poverty alleviation.

Challenges for Inclusive Growth

1. Poverty – Although several steps have been taken by the government of India, more than 300 million Indians suffer from poverty.
2. Unemployment – It is one of the major challenges for Inclusive Growth. Due to the lack of skills and education, employment is still a serious problem.
3. Agriculture Backwardness – The agricultural field is not flourishing the way it should be due to declining soil degradation, climate change, and scarcity of water.
4. Regional disparities – The cast system and regional disparities contribute to the wealth gap and are key contributors to regional disparities. It is another challenge for Inclusive Growth.

Suggestions

Promoting inclusive growth requires policymakers to address both growth and income distribution, so it requires an understanding of the relationships between growth, poverty and inequality. Economic growth is a prerequisite for poverty reduction when income distribution is held constant. The acknowledgment that inequality affects the impact of growth on poverty reduction has led to a broad agreement that it is necessary to look beyond a ‘growth-first’ agenda in order to successfully deliver inclusive growth.

A robust inclusive growth strategy will complement policies to stimulate economic growth with those that foster equality of opportunity, alongside a social security net to protect the most vulnerable. As such, economic policies to promote structural transformation and create productive employment for poor people will need to be complemented by investments in human capital and other programmes to support social inclusion and equal access to jobs.