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The Need For Inclusive Growth In India Economics Essay

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Published: Mon, 5 Dec 2016

Indian market is the second largest consumer market in the world; the country’s economy has been facing towering economic development in current years. As a result, its responsibility in the world, both politically and economically has increased. On the other hand, it is keen that economic and social disparities across the country such as geographical, socio-economic, and cultural and gender lines have broaden in this phase. Inclusive growth, generally defined as fast development assisting every segment of society is the foremost approach of the Government of India. Inclusive growth is tremendously determined on the trend and extent of disparity, particularly about the regional inequality.

Reducing poverty, improving the quality of life, and ensuring that all parts of the society benefiting from the economic growth of the country is the primary motive of an inclusive growth plan. There are various micro and macro level interference which is favourable in promoting inclusive growth. The macro level, suggestions like better financial regulations, openness to Foreign Direct Investment, trade liberalization, tax reforms, privatization, providing social safety, reorientation of public expenses, and lawful and political reforms are helpful in leading policy negotiations for encouraging quick and inclusive growth. Where as in micro level, reducing income and non-income associated unfairness, developing infrastructure, education, healthcare, women’s empowerment, access to markets, role played by civil society organizations, accountability, and good governance can help accelerate poverty reduction.

Therefore it is clear that the key levers to achieve inclusive growth is increasing the accessibility, availability, quality, and affordability of different products and services so that all part of population will have fair opportunities. To accomplish this, the private sector and the government have to work mutually, while abiding by the primary principles of a democratic society.

This paper explains about the necessity to build India in inclusive manner and lay emphasis on why it is crucial to spotlight on inclusive growth at present. It elaborates the opportunities available for developing an inclusive India by recognizing the key levers in the field of education, governance, energy and resources, healthcare, infrastructure, financial inclusion, and business model innovation. It also explains some of the causes why efforts to make an Inclusive India in the earlier period have had only partial success and what can be done better in the future so that inclusive growth is achieved. The paper further stresses upon the need for the public and the private sector to work in cycle and influence each other’s potency to make inclusive growth.

BACKGROUND OF THE STUDY

One of the main aims of the government in recent years is moving Incredible India to Inclusive India. Inclusive growth is to be achieved so as to reduce poverty and other social and economic inequality, and also to maintain economic growth. In respect of this, the Planning Commission have made inclusive growth as a goal in the Eleventh Five Year Plan (2007-2012). The summary of the Twelfth Five Year Plan (2012-2017) lists tactic challenges which prolong the focus on inclusive growth. These include generation of employment, enhancing the capacity for growth, development of infrastructure, better healthcare, improved access to quality education, rural transformation, and continuous agricultural growth.

70% of the poor in India are from rural areas where there is a lack of vital social and infrastructure services, such as healthcare, roads, education, and drinking water. The key determinants of rural poverty in India are declined agricultural development, comparatively high food prices, and low rural wages, inadequate government expenses on rural growth and outdated infrastructure.

Significant interstate as well as intrastate regional disparities continue to exist in India. Low growth rates and poor public services in the poorer states further widens the disparity in development. For example, poverty concentration can be seen in the adjoining states of Bihar, Jharkhand, and Chhattisgarh, UP, MP, Orissa, and Rajasthan. These states collectively account for 44% of the total population and 60% of the poor.4 Most of the low-income states have rich natural resources but poor infrastructure and human development.

58% of the workforce in India is occupied in agricultural but the contribution of agricultural and related sectors in the GDP is only around 14%. Therefore, to remove poverty it is very important that the rural agriculture must be encouraged. Agriculture persists to endure because of uneven land holdings and water scarcity. Poor monsoon leads to crop failure and creates distress for farmers in repaying their debts.

With the largest population and widespread poverty, the country faces the challenge of connecting the rising gap between the haves and the have-nots. It is very important to spotlight on inclusive growth currently as it is interconnected by numerous challenges in front of the government, such as poverty reduction, increase in quantity and quality of employment, agricultural development, social sector development, reduction in regional disparities, and environmental protection. This paper has also tried to throw light on different opportunities available for building an inclusive India by identifying key levers in governance, education, infrastructure, healthcare, financial inclusion.

NEED FOR INCLUSIVE GROWTH IN INDIA

┬áInclusive growth is essential for sustainable growth and impartial allocation of wealth. The challenge is to obtain the height of growth to all parts of the society of the country. The most excellent way to attain inclusive growth is through developing people’s skills. Ever since freedom, considerable development in India’s economic and social improvement made the nation to develop strongly in the 21st century.

The following are the need for India to focus more on inclusive growth.

1. India is the 7th largest by area and 2nd by population and 12th largest economy at market exchange rate. Yet, India is away from the development.

2. 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 poverty and inequality and increasing economic growth are the main aim of the country through inclusive growth.

4. Political leadership plays a vital role in the overall development of the country which is not sustainable.

5. Corruption is one of the problems that prevent inclusive growth.

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

7. Accomplishment of highest GDP growth for country is one of the boosting factors which give the importance to the Inclusive Growth in India.

KEY LEVERS IN DIFFERENT SECTORS

1. GOVERNANCE

Good governance is at the centre of improving the deliverance of necessary services. It makes available the device for linking inclusion, decision making, and accountability. Poor infrastructure which makes critical for building an inclusive environment is often due to poor governance. Red tape, corruption and lack of responsibility have overwhelmed India from the time of independence.

The government has initiated many initiatives to attain the objective of rapid growth together with poverty alleviation and inclusiveness. Many of these proposals have failed to achieve their goals because of poor design, insufficient accountability, and corruption at various levels. Without effective implementation, even substantial government expenditure results in limited success. As of October 2010, out of the 559 projects undertaken by the government for infrastructure development, 14 were ahead of schedule, 117 were on schedule, 293 are delayed and for the balance 135 projects, no dates had been fixed for commissioning.

Realizing that accountability and transparency are critical elements of good governance, the Right to Information Act (RTI) was enacted in 2005. RTI empowers people to get information from the government and thus constitutes a big step towards transparency and accountability. However, the RTI itself suffers from poor monitoring of its implementation. The government officials are often reluctant to share information while common people have a low level of awareness regarding provisions of the RTI. It has been found that there is often unnecessary delay in the execution of RTI applications due to lack of motivation on the part of government officials. Unsurprisingly, it has been observed that in India, in order to fix the processes, appropriate changes first need to be effected at institutional levels to fix the institutions that design the processes.11

Good governance depends on processes and incentives to not only design good policies, but more importantly on institutions to implement these policies efficiently and with efficient utilization of resources. Transparency and accountability in the delivery of public services can be implemented through involvement of local self- governments, community, and civil society groups.

Effective governance will help in generating improved service delivery with better outreach to the poor. This will enhance the chances of the poor moving out of poverty and also reduce discrimination in access to basic public services, such as education and healthcare and thereby promote inclusive growth.

2. EDUCATION

Better education is often an important means to better jobs, increased income, and a better quality of life. To illustrate, Japanese investments in education after the Second World War helped it transform from a defeated nation to an industrial nation that created innovative products, increased employment, and provided inclusive growth to its citizens. Over the past few decades, the global economy has shifted from being manufacturing-centric to a knowledge driven one. The services sector contribution of world production has grown from around 52% in

1970 to 68% in 2005.12 India’s increasing integration with the global economy and the growth of sectors such as IT, BPO, and financial services have led to an increased demand for knowledge workers. Although India currently has around 480 universities and 22,000 colleges13, in the next 10 years, India will need 700 new universities and 35,000 new colleges. The population of India, cutting across regions, languages, and socioeconomic status, has begun to appreciate the value of education in a global economy and demonstrated an increased willingness to pay for quality education. Anecdotal evidences abound of domestic helpers using their earnings to send their children to English medium schools in the hope of a better future.

“India needs to widen its education base radically,”14 said Prof. Amartya Sen after receiving an honorary degree of Doctor of Literature from the National University of Educational Planning and Administration at New Delhi in July 2011.However, as mentioned by Prof. Sen, there is a lot that remains to be done. The primary education sector in India is marked by variations – the Seventh All India Education Survey published by the National Council of Educational Research and Training in 2006 found that although 80% of children in the 5-14 age range were enrolled into schools, the rate dropped to less than 50% for secondary schools. Nearly 15% of government schools are single-teacher schools. In some states such as Bihar and Rajasthan, girls were only half as likely to be enrolled in secondary schools as boys. However, in states such as Kerala and Tamil Nadu, the secondary education enrolment rates are pro-female.

The government has passed the Right to Education Act, which makes education a fundamental right for all children in the age group of 6-14, but for the goal of complete literacy to be achieved, greater investment is needed in the physical and intellectual infrastructure. The midday meal scheme enacted by many state governments, with support from various NGOs and the private sector companies, addresses a fundamental problem that has plagued the education sector increasing student attendance and decreasing dropout rates. However, other problems continue to persist. Reports of teacher absenteeism, gender inequality in enrolment, and inadequate infrastructure, such as crowded classrooms are not uncommon. For example, the Right to Education Act mandates a maximum pupil-to-teacher ratio of 30:1, but according to the National University of Education Planning and Administration, over 12% of the nation’s schools had a pupil-to-teacher ratio of 60 or more in 2010. Correcting this imbalance requires investing in teacher training institutes, increasing the number of full-time teachers through better incentives, and in the interim bridging the gap through innovative models, such as para-teachers or contract teachers for short durations.


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