Challenges before inclusive growth in India

PROJECT-ECONOMICS

ISSUES AND CHALLENGES BEFORE INCLUSIVE GROWTH IN INDIA

ACKNOWLEDGEMENTS

At the outset, I would like to express my heartfelt gratitude and thank my teacher, for putting her trust in me and giving me a project topic such as this and for having the faith in me to deliver. Sir, thank you for an opportunity to help me grow.

OBJECTIVES OF THE PROJECT

1. To explore different problems present in achieving Inclusive Growth in India.

2. To discuss the challenges before Inclusive growth in India.

3. To investigate the future aspect of Inclusive Growth with regard to proposed XIIth Five Year Plan in India.

4. To suggest certain measures for the achievement of Inclusive Growth in India.

RESEARCH METHODOLOGY

The research project is descriptive and analytical in nature. The research project is mainly based on secondary sources which include books and webpages.

INTRODUCTION

"I have faith that the next generation of Indians, and the generation after that, will eliminate the scourge of poverty and make India rich. Then, the poor country would have deserved its inheritance ” – P. Chidambaram,

India’ is the new global buzzword. The economy growing at a phenomenal rate, combined with a flourishing democracy is making people sit up and take notice across the world. Yet, it is at cross-roads today. It is far from reaching its true potential. The country remains shackled in corruption, red tape, age old social barriers and a puzzling lack of transparency. Growth is not uniform across sectors; and large cross-sections of the populace remain outside its purview. Several social, political and economic factors need to be tackled for sustaining a high rate of growth, as well as to make this growth inclusive. Elimination of child labour, women empowerment, removal of caste barriers and an improvement in work culture are just a few of the things the Indian society needs to introspect on. Tackling corruption in high places, removing the ills of the electoral system, shunning politics of agitations and keeping national interest above petty politics may not be too much to ask of the country’s policy makers. Rapid growth in the rural economy, well planned and targeted urban growth, infrastructure development, reforms in education, ensuring future energy needs, a healthy public-private partnership, intent to secure inclusivity, making all sections of society equal stakeholders in growth, and above all good governance will ensure that India achieves what it deserves.

Of the eight richest people in the world four are Indian, but the irony still remains that there’s a marginal farmer in the interior of Maharashtra, who is struggling to feed his five children, the youngest of whom is a son, uneducated and unemployed, with four sisters, all of marriageable age, whose marriage the farmer cannot afford. Try telling the farmer that the economy is growing at a handsome 9% per annum, hardly consolation for the empty stomachs his children go to bed with every night.[1]

Few would argue that the Indian economy is growing, salaries are going through the roof for the educated, there are jobs mushrooming in the IT hubs of Bangalore and Hyderabad, disposable income for the ‘Call Centre’ crowd, that is egging on the foray of several luxury goods never before seen in the nation, is becoming all the more accessible but the fact still remains, that the poor are still poor even though the rich have become super rich and the hitherto not so rich, rich. The growth is far from inclusive. The Oxford English Dictionary gives four meanings to the word ‘inclusive’, with the most appropriate for the purposes in this paper being, "not excluding any section of society." We all know it, we see the beggars on the streets, read about the farmer suicides in Maharashtra, about the biggest slums in the world and even closer home, we know of the cleaning lady who cannot afford treatment for her ailing husband, but still works for paltry sums waiting for a miracle to save her family. We all understand their plight, we even sympathize and empathize with them, for the ten minutes after reading an article in a newspaper or seeing an amputated beggar on the street, only to have it all tramped upon by the news of the raise the successful executive father has received or that of the young MBA son buying a Mercedes in silicon valley and the celebrations thereafter at the new Italian place around the corner.

Economic liberalization which began in the early 1990s has accelerated India’s growth rate to an average of 7% per year since 1997, up from 3.5% in the 1970s. During this period India transformed itself from an agricultural economy to a service economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled Services have had a significant role in changing the face of the economy. The good news does not end here. The growth rate for India is expected to overtake China’s double digit growth rate in the next few years.

This news however, hides some alarming trends. Growth continues to bypass a large section of people. A large majority of Indians live in the villages and they have been excluded from India’s growth story. Rural India is facing endemic problems – land holdings are shrinking, slow growth in agricultural production and limited social and economic infrastructure. Women, Children, backward castes & classes and other minorities often are excluded from the growth story. The rise of grass root militant movements which plague nearly one-tenth of India is a direct result of this economic exclusion and the unfulfilled aspirations of the bottom billion.
 

The task to feed, house, clothe, educate and employ India’s growing population, which is expected to reach nearly 1.5 billion by 2030, is enormous. This includes a net increase of 270 million people which will be added to the work force.  Bringing them into the economic mainstream both as producers and consumers of goods and services must be the basis of any inclusive strategy.

Today, economic power rests with a precious few. According to Credit Suisse, the top 1% of the population own 15.9% of India’s wealth, the top 5% own 38.3% and the top 10% have 52.9% of Indian’s wealth. What this really means is that 90% of Indian, the urban and rural poor has a very small stake in the pie. Growth must lead to the re-distribution of this ever growing pie to a situation where the bulk of the population is middle class and a smaller percentage of the population is either very rich or very poor.

The aspirations of the “bottom billion’ cannot be wished away. If India is unable to address these aspirations, the “demographic dividend” that the country can reap will become a demographic liability. This mammoth task cannot be done by government alone. Industry and civil society must partner with government to drive inclusive growth. Cognizant of income disparities and growing aspirations of the people the government has been working to address these through programs like NREGA and Aadhaar. Civil society has contributed with design and governance oversight. But, in my view the greatest lever for driving inclusion is jobs.

The India’s economy is headed in a new direction - striving to touch double – digit annual growth rates, and a sustainable, equitable and inclusive growth, taking into account the needs of all sections of society.  India’s economic growth has passed through for major phases over the past 60 Years  And is emerging to a new phase with a broad objective of “Inclusive Growth”.

The 11th Plan defines inclusive growth to be “a growth process which yields broad-based benefits and ensures equality of opportunity for all”. The Inclusive growth implies an equitable allocation of resources with benefits accruing to every section of society, which is an Utopian concept. Inclusive growth is broad- based. It is concerned with the Pro-poor growth, growth with equity. Inclusive growth is aimed at poverty reduction, human development, health and provide opportunity to work and be creative. The allocation of resources must be focused on the indented short and long terms benefits and economic linkages at large and not just equitable mathematically on some regional and population criteria.

The inclusiveness involves four attributes. They are Opportunity, capability, access and security. The Opportunity attribute focuses on generating more and more opportunities to the people and focuses on increasing their income. The Capability attribute concentrates on providing the means for people to create or enhance their capabilities in order to exploit available opportunities. The Access attributes focuses on providing the means to bring opportunities and capabilities together. The Security attribute provides the means for people to protect themselves against a temporary or permanent loss of livelihood. Together Inclusive growth is a process in which economic growth measured by a sustained expansion in GDP contributes to an enlargement of the scale and scope of all four dimension .

This project has tried to throw light on different aspects of inclusive growth and its success and failure in Indian Economy.

NEED FOR INCLUSIVE GROWTH IN INDIA

Inclusive growth is necessary for sustainable development and equitable distribution of wealth and prosperity . Achieving inclusive growth is the biggest challenge in a country like India. In a democratic country like India, bringing 600 million people living in rural India into the mainstream is the biggest concern. The challenge is to take the levels of growth to all section of the society and to all parts of the country. The best way to achieve inclusive growth is through developing people’s skills.

Mr. Jeffrey, Chairman & CEO of Manpower Planning, USA, said that , a multi faceted approach towards education and skills development is necessary to achieve grow. He said the challenge of skills shortage can be addressed through public private partnership.

Since independence, significant improvement in India’s economic and social development made the nation to grow strongly in the 21st century. The following factors encouraged the India to concentrate more on inclusive growth.

1. India is the 7th largest country by area and 2nd by population. It is the 12th largest economy at market exchange rate and 4th largest by PPP. Yet, India is far away from the development of the neighborhood nation, i.e., China.

2. The exclusion in terms of low agriculture growth, low quality employment growth, low human development, rural-urban divides, gender and social inequalities, and regional disparities etc. are the problems for the nation.

3. Reducing of poverty and other disparities and raising of economic growth are the key objectives of the nation through inclusive growth.[2]

4. Political leadership in the country plays a vital role in the over all development of the country. But, the study has found that politicians in India have a very low level of scientific literacy.

5. Studies estimated that the cost of corruption in India amounts to over 10% of GDP. Corruption is one of the ills that prevent inclusive growth.

6. Although child labour has been banned by the law in India and there are stringent provisions to deter this -inhuman practice. Still, many children in India are unaware of education as they lives are spoiled to labour work.

7. Literacy levels have to rise to provide the skilled workforce required for higher  growth.

8. Economic reforms in the country are overwhelmed by out dated philosophies and  allegations by the politicians and opposition parties in India.

9. Achievement of 9% of GDP growth for country as a whole is one of the boosting factor which gives the importance to the Inclusive Growth in India.

10. Inclusiveness benchmarked against achievement of monitorable targets related to (i). Income & Poverty, (ii) education, (iii) health, (iv) women & children, (v) infrastructure, (vi) environment.

11.Even at international level also, there is a concern about inequalities and  exclusion and now they are also taking about inclusive approach for development

ELEMENTS OF INCLUSIVE GROWTH

According to Prime Minister, Sri. Manmohan Singh, the key components of the inclusive growth strategy included a sharp increase in investment in rural areas, rural infrastructure and agriculture spurt in credit for farmers, increase in rural employment through a unique social safety net and a sharp increase in public spending on education and health care.

The five interrelated elements of inclusive growth are:

1.Poverty Reduction and increase in quantity and quality of employment.

2. Agriculture Development

3. Social Sector Development

4. Poor quality delivery systems

5. Achievement of 119th rank among 170 countries on Human Development index.

6. Social indicators are much lower for scheduled castes and scheduled tribes.

7. Malnutrition among children is one major problem.

8. Since BPO brought the multi culture environment in India, this sector is facing  under seviour pressure due to global recession.

9. Social advancements in India is still at lower growth due to the strong influence of culture and regional disparities.

Disparities and Divides

Even as we address the specific challenges listed above, we must deal with the perception that development has failed to bridge the divides that  afflict our country and may even have sharpened some of them. Some of these perceptions may be exaggerated, but they exist nonetheless. The 11^th Plan must, seek to bridge these divides as an overarching priority.

There are many divides. Foremost among these is the divide between the rich and the poor. As explained , poverty is declining, but only at a pace which is no longer acceptable given the minimalist level at which the poverty line is fixed. There is also a divide between those who have access to essential services such as health, education, drinking water, sanitation etc., and those who do not. Groups which have hitherto been excluded from our society such as SCs, STs and some minorities and OBCs, continue to lag behind the rest.                            

Status of some socio-economic indicators[3]

PROBLEMS BEFORE INCLUSIVE GROWTH STRATEGIES IN INDIA

For a developing country like India, the need of inclusive growth is vital to achieve the over all progress of the country. Though it is positive for macro-economic stability, 2008-09 resulted a relative growth slow down, mostly from the spillover effects of the weakening of the global economic momentum and volatile financial markets. The following problems are the major concerns for developing countries like India to achieve the inclusive growth. They are:

(1)Poverty

(2)Employment

(3)Agriculture

(4)Problems in Social Development

(5)Regional Disparities

POVERTY

Percent of population living under the poverty line, which is 356.35 rupees or around $7 a month in rural areas. The World Bank estimates that 456 million Indians (42% of the total Indian population) now live under the global poverty line of $1.25 per day (PPP). This means that a third of the global poor now reside in India. However, this also represents a significant decline in poverty from 60 percent in 1981 to 42 percent in 2005, although the rupee has decreased in value since then, while the official standard of 538/356 rupees per month has remained the same. Income inequality in India (Gini coefficient: 32.5 in year 1999- 2000) is increasing. On the other hand, the Planning Commission of India uses its own criteria and has estimated that 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994.[7]

The source for this was the 61st round of the National Sample Survey (NSS) and the criterion used was monthly per capita consumption expenditure below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. 75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless labourers.

A proportionally large share of poor is lower castes. Many see the caste system as a system of exploitation of poor low-ranking groups by more prosperous high-ranking groups. In many parts of India, land is largely held by high-ranking property owners of the dominant castes that economically exploit low-ranking landless labourers and poor artisans, all the while degrading them with ritual emphases on their so-called god-given inferior status.

According to William A. Haviland, casteism is widespread in rural areas, and continues to segregate Dalits. Others, however, have noted the steady rise and empowerment of the Dalits through social reforms and the implementation observations in employment and benefits.

Employment

Employment considered as one of the big problems for inclusive growth in India. Raising population at a great speed after independence showed its impact on employment. The unemployment became the big worry to the development of the country. Since poverty is much higher than unemployment, employment is the only source to eradicate poverty. The quality and quantity of employment in India is very low due to illiteracy and due to over dependency on agricultural employment. The quality of employment is also a problem.

Unorganized employed people in India are around 85%. Workers in this sector do not have social security. The generation of productive employment for labour force in the economy, as employment is a key to inclusive growth is the toughest task for the country. The country is also facing in employment generation in all sectors, regions and for all socio economic groups particularly for poorer sections of population, backward regions, lagging sectors and SC/ST/OBC/women etc.

Agriculture

Traditionally, India is considered as the agricultural based country. As the majority of Indians are engaged in agriculture for employment, the recent developments in the other sectors decreased this major sector’s growth. Some of the problems in Indian agriculture are:

1. Long term factors like steeper decline in per capita land availability, shrinking of  farm size

2. Slow reduction in share of employment(still tt%)

3. Low labour productivity in agriculture and the gap between agri and non-agri is  widening.

4. Decline in yield growth due to land and water problems, vulnerability to world  commodity prices, farmer’s suicides.

5. Disparities in growth across regions and crops, i.e., growth rate declined more in  rain fed areas.

6. Thus these problems became the hurdles in the key area for the economic  development of the nation, i.e., agriculture.

Problems in Social Development

Social development is also one of the key concern in inclusive growth. The social development became the hot criteria in the recent past in India. Social development also facing some problems which is making the path critical to inclusive growth in the country. Some of the problems in social sector are:

1. Significant regional, social and gender disparities

2. Low level and slow growth in public expenditures particularly on health

3. Poor quality delivery systems

4. Achievement of 119th rank among 170 countries on Human Development index.

5. Social indicators are much lower for scheduled castes and scheduled tribes.

6. Malnutrition among children is one major problem.

7. Since BPO brought the multi culture environment in India, this sector is facing  under seviour pressure due to global recession.

8. Social advancements in India is still at lower growth due to the strong influence of culture and regional disparities

The vision of inclusiveness must go beyond the traditional objective of poverty alleviation to encompass equality of opportunity, as well as economic and social mobility for all sections of society, with affirmative action for SCs, STs, OBCs, minorities and women. There must be equality of opportunity to all with freedom and dignity, and without social or political obstacles. This must be accompanied by an improvement in the opportunities for economic and social advancement. In particular, individuals belonging to disadvantaged groups should be provided special opportunities to develop their skills and participate in the growth process.

This outcome can only be ensured if there is a degree of empowerment that creates a true feeling of participation so necessary in a democratic polity. Empowerment of disadvantaged and hitherto marginalized groups is therefore an essential part of any vision of inclusive growth. India’s democratic polity, with the establishment of the third layer of democracy at the Panchayati Raj Institution (PRI) level, provides opportunities for empowerment and participation of all groups with reservations for SCs, STs, and women. These institutions should be made more effective through greater delegation of power and responsibility to the local level.

Regional Disparities

Regional disparities are also a major concern for India due to different culture and traditions. Traditional cultures, caste system and the rich & poor feelings favoured some specific groups as a result, the regional disparities raised in India before and after independence. And also, due to the development in agriculture and industrial sector some regions in India developed fast and some other places still are facing the scarcity. Some of the regional disparities problems are:

1. Per capita income is highest at Rs.16,679 in Punjab and lowest per capita income is at Bihar with Rs.3557.

2. Female infant mortality varies from 12 in Kerala to 88 in Madhya Pradesh.

3. Female literacy varies from 33.6% in Bihar to 88% in Kerala.

4. Richer states grew faster than the poorer states

CHALLENGES BEFORE INCLUSIVE GROWTH STRATEGIES IN INDIA

The key components of the inclusive growth strategy included a sharp increase in investment in rural areas, rural infrastructure and agriculture spurt in credit for farmers; increase in rural employment through a unique social safety net and sharp increase in public spending on education and health care. The government also should go for a variety of legislative interventions to empower the disadvantaged. Some of the challenges and opportunities before inclusive growth strategies in India are:

1.Poverty alleviation is one of the big challenges for India. Eradication of poverty in India is generally only considered to be a long-term goal. Poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickle-down effect of the growing middle class. Increasing stress on education, reservation of seats in government jobs and the increasing empowerment of women and the economically weaker sections of society, are also expected to contribute to the alleviation of poverty.

2.For agricultural growth, the private players can participate in to bridge the gap including providing micro finance. Contract farming, setting up storage facilities for agro-produce, and producing them from farmers. The private sector could also develop heritage sites and tourist spots and encourage the promotion of traditional arts and carafats in joint ventures with rural enterprises. The government of india should also increaase it’s present moratorium on interest payments, lowering of farm credit rates for increase in agricultural growth.

3.Government schemes should target eradication of both poverty and unemployment (which in recent decades has sent millions of poor and unskilled people into urban areas in search of livelihoods) attempt to solve the problem, by providing financial assistance for setting up businesses, skill honing, setting up public sector enterprises, reservations in governments, etc. The decreased role of the public sector after liberalization has further underlined the need for focusing on better education and has also put political pressure on further reforms.

1.Child labor is a complex problem that is basically rooted in poverty. The Indian government is implementing the world's largest child labor elimination program, with primary education targeted for around 250 million. Numerous non-governmental and voluntary organizations are also involved.  Special investigation cells have been set up in states to enforce existing laws banning employment of children (under 14) in hazardous industries. The allocation of the Government of India for the eradication of child labor was $10 million in 1995-96 and $16 million in 1996-97. The allocation for 2007 is $21 million. Failure to implement the law and poor rehabilitation policies need urgent attention which is a big challenge for India to achieve inclusive growth.

5. Social development is possible through achieving Women Empowerment and eradicating the regional disparities. Though the Government is giving the women empowerment by giving special reservations, the women’s advancement in India is still not matched the expectations for inclusive growth. Presently, the women are dealing with the top posts in India like President, Loksabha Speaker and Railway Minister.  

6. To bring in inclusive growth, it is necessary to enhance the capabilities of women by providing education, so that they get the opportunity of getting employed and be self sustainable.

Government of India has stepped up for inclusive growth by launching many initiatives with features that are innovative, flexible and reform oriented such as:

1. Rural Infrastructure(Bharat Nirman)

2. Employment(Mahatma Gandhi National Rural Employment Guarantee Scheme)

3. Regional Development ( Backward District Development Program)

4. Education (Sarva Shiksha Abhiyan)

5. Rural Health(National Rural Health Mission)

6. Urban Infrastructure (National Urban Renewal Mission)

XITH FIVE YEAR PLAN AND INCLUSIVE GROWTH-HOW MUCH ACHIEVED

In XIth Plan GDP Growth likely to be of average 8.2 % as compared to 7.7 % of the 10^th Plan but what we are lacking is the achievement of inclusiveness. The 11th Plan defines inclusive growth to be “a growth process which yields broad-based benefits and ensures equality of opportunity for all”. But this inclusiveness is not reflected as it was expected. We  have seen progress on inclusiveness :Agricultural Growth, Poverty Reduction, Education, Health, Upliftment of Scs /STs etc. But however progress on inclusiveness is less than expected. It can be explained as :

1. India is likely to miss Millenium Development Goals (MDG),except perhaps on poverty.

2. Inflation has accelerated in the last two years.

3. Current International Environment is very uncertain.

4. Global Pressure on food ,oil and other commodity prices.

5. Financial conditions and exchange rates are likely to be volatile due to sovereign debt related problems in Europe/U.S. and readjustment of extra-ordinary monetary/fiscal easing.

6. The goal of increasing the literacy level among backward classes and other weaker sections has not been achieved.

7. Agriculture growth is still in vulnerable conditions.

8. The employment schemes like MGNREGS are not upto the mark. The red-tapism and corruption are still out of control.

9. There are so many Plans, Policies, Schemes but their implementation is not according to their expected level.

PROPOSED XIITH FIVE YEAR PLAN AND INCLUSIVE GROWTH

As India’s government prepares to submit its approach paper for its 12th five-year plan [8] (a plan which covers years 2012 to 2017), the Planning Commission’s focus on instilling “inclusive growth” is making headway. The plan is expected to be one that encourages the development of India’s agriculture, education, health and social welfare through government spending. It is also expected to create employment through developing India’s manufacturing sector and move the nation higher up the value chain. Prime Minister Manmohan Singh, however, warned that maintaining fiscal discipline is important as well.

The commission will likely strive to enact policies that will achieve somewhere around a 10 percent growth rate in factories and a 4 percent growth rate in farm produce, though Prime Minister Singh has asked the plan to set the nation’s growth rate firmly at 9 percent to 9.5 percent.

Come May, a view into the implementation of these goals should be apparent. A question that India’s government will have to grapple with, much like that of any emerging market, is whether to continue to focus on GDP growth in the face of soaring food prices and economy-wide inflation. An important aspect of generating “inclusive growth” is shifting the target of government aid to rural areas. Typically, large projects such as power generation, roads whereby freight can travel, and airports receive the lion’s share of government subsidies, while rural infrastructure receives comparatively little.

A recent op-ed piece in the Wall Street Journal by Saurabh Tripathi, a partner with Boston Consulting Group, echoed these sentiments.“Rural infrastructure, which serves 70 percent of the population, doesn’t get the attention it deserves. As the Planning Commission sets out to draft the country’s planned investments for the next five years, it is important to take note of this gap, and the innovative solutions needed to fill it,” Tripathi wrote.

As indicated from the planning commission’s presentation to the prime minister on April 21, the quantitative metrics known thus far in the early stage of the five-year plan are:

1. A target of GDP growth in the 9 percent to 9.5 percent range

2. An increase in literacy rates to 100 percent between the plan’s period from 2012 to 2017

3. An increased expenditure on health from 1.3 percent to 2.0 percent of GDP [9]

In a boon for industry, the planning commission indicated that it aims to have industry and manufacturing-related activities grow by 11 percent over the next five years, contrasted to 8 percent over the previous 11th five-year plan. It also aims to undertake somewhat vaguely defined, but certainly well-intentioned, structural and regulatory reforms to facilitate investment.

The presentation highlighted the planning commission’s views that commercial energy demand is expected to increase by 7 percent per year over the next five years.

To address that increase in demand, the planning commission recommended that all methods of current energy production and distribution be developed, from coal to nuclear energy to solar and wind, and proposed that existing taxes on electricity should not be raised.

Interestingly, the Planning Commission envisioned an expansive role for Indian SOE Coal India:“Coal India must become a coal supplier and not just a mining company. Should plan to import coal to meet coal demands. This requires blending of imported and domestic coal as supplied by Coal India.”

All told, in its early stages, the 12th five-year plan promises a lot for rural development and growth. In that sense, it is similar to China’s latest iteration of its five-year plan, which seeks to improve the lot of rural Chinese peoples by increasing urbanization and industrial efforts in central and western China. But, by contrast, while the Chinese government seems to be continuing with nation-wide industrialization efforts, the Indian government may be attempting to promote a policy of reverse migration by making rural living more attractive with some access to modern amenities, but hopefully without the accompanying chaos that goes with it.

The Basic objective as stated in the Planning Commission presentation is “Faster, More Inclusive and Sustainable Growth”[10].It was said that the priority areas in 12^th Five Year Plan would be Betterment of Farmers, Small Industries, Cottage Industries etc. It is asserted by the Planning Commission that for growth to be more inclusive we need:

1. Better Performance in agriculture .

2. Faster Creation of Jobs, especially in manufacturing.

3. Stronger Efforts at health, education and skill development

4. Improved effectiveness of programs direct aimed at the poor.

5. Special programs for socially vulnerable groups.

6. Special programs for disadvantaged or backward regions.

The objectives and targets of the Proposed 12^th Five Year Plan put emphasis on the achievement of Inclusive Growth but it is still a burning question that whether this time India would be able to achieve all the targets decided for the achievement of Inclusive Growth or like 11^th Five year Plan it would lag behind and the Inclusive Growth will be seen only in papers.

Prescriptions: collective efforts for inclusive growth

India has the potential of becoming a leading economy and has the unique opportunity to make that growth inclusive, provided there is willingness on the part of all sections of society to put in hard and disciplined work, together with serious, sustained and purposeful planning. First, there is much that needs to be done to build up India’s potential. Better governance, more and better educational institutions, higher agricultural productivity, controlled inflation and improvement in infrastructure are some of the major and more important steps required in this direction. I mention these specifically, because each of these steps has a bearing on the inclusiveness of growth as well. Agriculture is extremely important for inclusive growth, since a large majority of the Indian population is dependent on farming. Improved agricultural productivity would bring in its wake increased family incomes for this vast majority. This, together with better infrastructure in the countryside – greater rural connectivity, rural electrification and investment in irrigation, would aid tremendously in tackling rural poverty, as well as add to the overall prosperity of the nation.

The ‘India Shining’ campaign of the previous government failed to impress the people precisely for this reason because a majority of the rural populace had remained outside the purview of the increase in national GDP.

Better governance is the need of the hour, more so because the government in India still has a majority stake in almost all essential sectors e.g. in the crucial sectors of health, sanitation and water. It is in such social sectors that we find the political parties least interested, especially once they come to power after elections. Yet these are the fields which need to be paid more attention to if we are to improve human development alongside economic growth; with the current situation, it is no wonder that India figures extremely low on world human development index reports. There is a need for more public-private partnerships. The private sector should take more social responsibility and contribute towards making growth more inclusive.

There also ought to be greater accountability for politicians and civil servants. Progress in a democracy is slow but sustaining. This is even truer of a large and diverse country the size and complexity of India. The economic reforms that were introduced in 1991 are starting now to bear fruit with the growth rate reaching 9%. However, the relatively benign economic climate of the past few years perhaps made the government complacent. This, together with the difficulties and constraints brought about by a coalition government, led the authorities to put on the backburner some of the much needed economic reforms. The time has now come to act boldly and decisively. The astounding success that the country achieved in the telecommunication field – high density across the country and world’s cheapest call rates affordable by all – needs to be reproduced in other areas. The problem of a massive parallel black economy, which has evaded a solution so far, needs to be tackled urgently and these funds brought into the much needed social sectors. Education is extremely important for improving the skill levels of the population so that everyone can be an equal partner in the country’s growth. More and better universities, schools and technical institutes should be created. Inflation, which is running amok today, affects the poor man the most, severely limiting inclusiveness of growth. We need to fix acceptable inflation targets and constantly monitor them so that they do not go beyond the outer agreed limits. Similarly, India’s fiscal deficit remains one of the highest in the world, almost 7% of GDP in real terms. Political parties, across the spectrum, need to look beyond petty politics, sit down and agree on parameters for inflation and fiscal deficit beyond which certain tough economic measures must come into play automatically. Finally, rights of women, children, minority communities and the other marginalised sections of society must be constantly watched and protected if we wish to reach our goal of a truly developed society.

India has been endowed with some of the world’s most essential minerals, beautiful places, diverse cultures and capable and talented people. It is time we stop squandering this advantage and make the most of what most countries can never even dream to have. There is much to be done, but if done and done correctly, then nothing can stop us from reaching the pinnacle of the world.

SUGGESTIONS

1. Equity is important for economic development so it should be preferred.

2. Agricultural Development is necessary for economic development.

3. Economic reforms are important. But macro-poor policies (fiscal, trade, financial, monetary etc.) should have pro-poor focus.

4. Structural change should have followed agriculture-industry-services sequence.

5. Development of manufacturing sector is important for creation of productive employment.

6. Equality of opportunities (education) should be given.

7. South East Asian and East Asian experience can be used.

8. Shift focus of reforms to delivery systems

9. Importance of women’s economic and social empowerment

10. Decentralization

11. Economic reforms in relation to socio-political environment

Conclusion

BIBLIOGRAPHY/WEBLIOGRAPHY/REFRENCES

1. Approach Paper To Eleventh Five-Year Plan m(2007-2012) H.P.Planning Department  Government of Himachal Pradesh ,Shimla.

2. Centre for Budget and Governance Accountability (CBGA) (2009) ‘How Inclusive is the Eleventh Five-Year Plan?’ People’s Mid-Term Appraisal. New Delhi: Centre for Budget and Governance Accountability.

3. Chhibber, Ajay  and Thangavel Palanivel“India Manages Global Crisis But Needs Serious Reforms for Sustained Inclusive Growth”Tenth Annual Conference on Indian Economic Policy Reform October 21-23, 2009, Stanford University, Landau Economics Building (as downloaded from (http://www.toi.com)

4. Dev, S. and Ravi, C. (2007) ‘Poverty and Inequality: All India and States, 1983-2005.’ Economic &Political Weekly 42(6), 10-16 February.

5. Eleventh Five Year Plan(2007-2012) Inclusive Growth, Vol. 1 ,Planning Commission Of India, Oxford University Press, New Delhi(2008)

6.Eleventh Five Year Plan:What We Need to Monitor? A Guide for Civil Society ,Yamini Mishra and Amitabh Behar  for Centre for Budget and Governance Accountability (CBGA),National Social Watch Coalition (NSWC),Wada Na Todo Abhiyaan (WNTA)(2008)

7. Kalirajan, K., Shand, R.T. and Bhide, S. (2010 )Strategies for Achieving Sustained High Economic Growth. New Delhi: Sage.

8. Krishna, A. (2010) One Illness Away: Why People Become Poor and How They Escape Poverty.Oxford: Oxford University Press.

9. Mehta, J. and Venkatraman, S. (2000) ‘Poverty Statistics.’ Economic & Political Weekly 35(27),1-7 July

10. Planning Commission (2006) ‘Report of the Steering Committee on Rapid Poverty Reduction and Local Area Development for the Eleventh Five- Year Plan (2007-2012).’ New Delhi: Planning Commission.

11.Raabe, K. Birner, R. Sekher, M. Gayathridevi, K.G. Shilpi, A. and Schiffer, E. (2010) ‘How To Overcome the Governance Challenges of Implementing NREGA: Insights from Bihar Using Process-Influence Mapping.’

Discussion Paper 00963. Washington, DC: International Food Policy Research Institute.

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2. http://jstor.org.com

3. http://www.slideshare.com

4. http://www.pci.com

5. http://www.economictimes.com

6. http://www.hindu.co.in