Issues with Inclusive Growth

Agricultural Backwardness

• Around 44% of people in India have agriculture-related employment but its contribution to the Indian GDP is only about 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.

Infrastructure

• Infrastructure is fundamental to economic and inclusive growth. In budgetary allocations, Infrastructure is assigned the highest expenditure. Major proportion of this allocation goes to large projects such as power generation, freight corridors, and airports etc while rural infrastructure is immensely neglected. In many areas, the lack of proper infrastructure is acute. 
• Apart from that, the rural-urban divide in infrastructure development has become prominent.

Regional disparities

• Regional disparities are a major concern for India. Factors like the caste system, gap between rich and poor etc. contribute to the regional disparities which create a system where some specific groups hold more privileges over others.

Growth and Development

• Growth vs. Development Over a period since economic reforms, India’s economic growth has witnessed a mixed effect on real development. 
• GDP is considered the key parameter of economic growth. In reality, the increasing GDP growth rate has not trickled down to the bottom of the pyramid. 

Social injustice

• Government is gung-ho on their efforts to reduce the poverty rate; even the UN’s MDG report  affirms that India’s poverty rate is expected to fall to 22% by 2015 from 51% in 1990. At the same time, there are other chronic issues which have magnified over a period e.g. child malnutrition. 

Low Technological Innovation

• The Indian economy is suffering from a technology-lag vis-a-vis developed economies and other industrialized economies. 
• Poor rate of technology and innovation creates a burden on capital and resource base. India’s agricultural productivity is far below that of  developed countries. Agriculture is the mainstay of economic growth and a source to unskilled work-force employment. 

Policy approaches for inclusive growth

• Growth oriented policy:  India’s economic planning started with growth oriented policy. First plan (1951-56) was started with an objective of rapid and balanced growth. The second plan (1956-61) also put a thrust on rapid growth of industrialization. More recent twelfth five year plan (2007-12) has blended economic growth with inclusion with an objective of Faster  Sustainable and More Inclusive Growth.  

• Direct Intervention: Direct intervention is facilitating inclusive growth through legislation, regulation, credit facilitation and providing livelihood security are the forms of direct intervention by the government. Now, the orientation of administrative machinery is transformed from regulator to facilitator. 

• Capacity Building:  Capacity Building is basically capacity development. However, capacity development is not only limited to skill building or entrepreneurial innovation. Capacity development through training of rural development functionaries is also a means of capacity building. 

• Welfare schemes: Food subsidies, public distribution of essential commodities, nutrition programs, financial support through micro finance are examples of the ways in which welfare schemes are implemented.