Inclusive Growth

Last Updated: Jan 2025 (Inclusive Growth)

Table of Contents

This article deals with ‘Inclusive Growth.’ This article is part of our series on ‘Economics’ which is an important pillar of the GS-3. For more articles, you can click here.

What is Inclusive Growth?

According to United Nations Development Program (UNDP), ‘Inclusive Growth is a process and outcome where all groups have participated in the organization of growth and benefited equitably.‘

Inclusive Growth is a very broad concept and includes the following aspects

Social Dimensions	– Affordable Education – Quality Healthcare – Social Equality – Gender Parity – Regional Parity – Women Empowerment
Economic Dimensions	– Financial Inclusion – Quality Employment – Resilience to external shocks – Agricultural development
Political Dimensions	– Long term planning – Transparent and efficient governance – Safety to people – Zero corruption
Environmental Dimensions	– Sustainable Development – Reduction of waste – Inclusion of the needs of the future generation

Side Topic: Pro-Poor Growth

If the growth can bring more people out of poverty and raise people’s standard of living, it is termed as Pro-Poor Growth.

Pro-Poor Growth is a narrow concept than Inclusive Growth

In Inclusive growth, we make sure that people at the bottom of the pyramid are not mere recipients of the benefit.
We can achieve pro-poor growth via the Trickle Down Effect, where benefits provided to those at the top of the pyramid trickle down. But in Inclusive Growth, those at the bottom are also part of growth and aren’t just recipients of the benefits of growth.

Side Topic: Trickle Down

It is a ‘Top-to-bottom approach’ to Economic Development.
The proponents of this approach argue that the benefits of growth would automatically trickle down to the bottom.
In this approach, Tax Breaks and other economic benefits are provided by the government to businesses. It is believed that these benefits provided to the businesses will ultimately benefit poor members of society as it will lead to more investments and higher job creation in the economy.

Evidence from around the world is that the economic policy paradigm of first increasing the overall size of the pie by reducing taxes at the top and then “redistributing” the wealth has not delivered benefits to people at the bottom of the pyramid. Tax cuts to the businesses and wealthy ultimately lead to a flight of wealth to the tax havens and greater inequalities.

Ways to ensure it

Enhancing human capability by providing

Education
Health facilities
Skill development
Equal opportunities to all
Women empowerment

Employment generation: It can be created via

Attracting investment in India
Promoting entrepreneurship via schemes like StartUp India
Focusing on labor-intensive sectors (like textile)

The target of the policies of the Indian government isn’t just faster growth but also inclusive growth. Following schemes are aimed at achieving it

Poverty Reduction (through programs like MNREGA)
Employment Generation (Make in India, Atma Nirbhar Campaign etc.)
Access to essential services (PDS, Ayushman Bharat and RTE)
Equality of opportunity
Skill-building (Skill India Mission)
Good governance (Governance Reforms, RTI etc.)
Women empowerment

Question

Can we achieve Inclusive growth through capitalism?

Inclusive Growth