Inclusive growth in India "EMPOWER IAS"

 

Context:

• India lags behind many Human development indicators. India’s economic growth is not benefitting the poor. There is a need to create a new framework for measuring the inclusiveness of growth.

 

Why India’s Economic growth is not inclusive?

• One, Rising hunger, according to the Global Hunger Index 2020 India ranks 94^th amongst 107 countries.
• Two, Indian citizens are amongst the least happy in the world. According to the World Happiness Report of the UN Sustainable Development Solutions Network, India ranks 144^th amongst 153 countries.
• Three, the Pandemic has increased the inequality gap further by pushing many poor people into poverty. According to a World Bank report, during the pandemic the very rich became even richer. Whereas the number of poor people in India (with incomes of $2 or less a day) is estimated to have increased by 75 million.
• Four, unsustainable economic growth. According to global assessments, India ranks 120 out of 122 countries in water quality, and 179 out of 180 in air quality.

 

Suggestions for more inclusive growth

1. India needs a new strategy for growth, founded on new pillars. Because the older economic growth strategy of relying on Foreign capital has made “ease of living” difficult, while the “ease of doing business” improved. The new economic strategy should be based on the following two pillars,
2. One, Economic growth must no longer be at the cost of the environment.
3. Two, the benefits of Economic growth should be made equitable. Thus creating more incomes for its billion-plus citizens
4. There is a need for local solutions to measure the wellbeing of people, rather than relying on universal, standard progress measure frameworks.

• While GDP does not account for vital environmental and social conditions that contribute to human well-being.
• Many countries are developing universally acceptable frameworks.
• They are trying to incorporate the health of the environment, public services, equal access to opportunities, etc. to make it universal, more scientific, and objective.
• However, experiences have shown that this ‘scientific’ approach does enable objective rankings of countries. For example, World Happiness Report misses the point that happiness and well-being are always ‘subjective’.
• Standard global solutions will neither make their conditions better nor make them happier. So, local communities need to find their own solutions within their countries, and in their villages and towns to measure their well-being.
• We need to start recognizing the role of societal conditions that are responsible for the difficulties of the poor. For example, Caste system, Patriarchy, indifferent attitude towards the disabled, transgender, etc

1. This way of looking at things also equally contributes to the increasing Inequality.
2. move away from centralised Governance model towards decentralized form of governance. Because Governance of the many by a few politically and economically powerful persons may work for a few
3. Whereas, decentralized system of governance will allow communities to find their own solutions to complex problems.

 

Elements of Inclusive Growth

Skill Development

• Harnessing the demographic dividend will depend upon the employability of the working age population, their health, education, vocational training and skills. Skill development plays a key role here.
• India is facing a dual challenge in skill development:
   
  • First, there is a paucity of highly trained workforce
  • Second, there is non-employment of conventionally trained youths
• According to the Economic Survey 2017, over 30% of youth in India are NEET (Not in education, employment or training).
• Similarly, UNICEF 2019 reports stats that at least 47% of Indian youth are not on track to have the education and skills necessary for employment in 2030.

 

Financial Inclusion

• Financial Inclusion is the process of ensuring access to financial services to vulnerable groups at affordable costs.
• Financial inclusion is necessary for inclusive growth as it leads to the culture of saving, which initiates a virtuous cycle of economic development.

 

Technological Advancement

• The world is moving towards an era of  Industrial Revolution 4.0. These technological advancements have capabilities to both decrease or increase the inequality depending on the way these are being used.
• Several initiatives have been taken by the government, eg. Digital India Mission, so that a digitally literate population can leverage technology for endless possibilities.
• Technology can help to combat other challenges too, eg:
  • Agriculture- Modern technology can help in making an agro-value chain from farmer to consumer more efficient and competitive.
  • Manufacturing- Technology can resolve the problems of finance, procuring raw materials, land, and linkages with the user market. GST was made possible only with the help of sound technology.
  • Education- Innovative digital technologies can create new forms of adaptive and peer learning, increasing access to trainers and mentors, providing useful data in real-time.
  • Health- Technologies could transform the delivery of public health services - extend care through remote health services
  • Governance- Technology can cut down delays, corruption, and inefficiency in the delivery of a public service

 

Economic Growth

• India is among the fastest-growing major economies in the world. However, currently Indian economy is facing slowdown due to both cyclic and structural challenges.
• However, the target of becoming a $ 5 trillion economy by 2024-25 can allow India to reduce inequality, increase social expenditure and provide employment to all.

 

Social Development

• It means the empowerment of all marginalised sections of the population like SC/ST/OBC/Minorities, women and transgenders.
• Empowerment can be done by improving institutions of the social structure i.e. hospitals especially primary care in the rural areas, schools, universities, etc.
• Investment in social structures will not only boost growth (by fiscal stimulus) but will also create a healthy and capable generation to handle future work.

 

 

Challenges in Achieving Inclusive Growth

Poverty:

• As per the Multidimensional Poverty Index (MPI) 2018, India lifted 271 million people between 2005-06 and 2015-16, with the poorest regions, groups, and children, reducing poverty fastest.
• India demonstrates the clearest pro-poor pattern at the subnational level. Still, despite the massive gains, 373 million Indians continue to experience acute deprivations.

 

Unemployment:

• As per the Periodic Labour Force Survey (PLFS) of NSSO, the unemployment rate among the urban workforce was 7.8%, while the unemployment rate for the rural workforce was 5.3% totaling the total unemployment rate at 6.1%.
• The quality and quantity of employment in India are low due to illiteracy and due to over-dependence on agriculture.
• The quality of employment is a problem as more than 80% of people work in the informal sector without any social security. Low job growth is due to the following factors: Low investment Low capital utilization in industry Low agriculture growth

 

 

Agriculture Backwardness :

• Around 44% of people in India have agriculture-related employment but its contribution to the Indian GDP is only 16.5% which lead to widespread poverty Issues in agriculture are as follows:
•  Declining per capita land availability
•  A slow reduction in the share of employment
• Low labour productivity
• Decline in agriculture yield due to climate change
• land degradation and unavailability of water Disparities in growth across regions and crops

 

Issues with Social Development

• Social development is one of the key concerns for inclusive growth. But it is facing some problems such as: Significant regional, social and gender disparities Low level and slow growth in public expenditure particularly in health and education .
• The poor quality delivery system Social indicators are much lower for OBC, SC, ST, and Muslims Malnutrition among the children - India ranks 102 in Global Hunger Index