What is Inclusive Growth?
The Planning Commission of India defined inclusive growth as “growth that is broad-based across sectors, and inclusive of a large part of the country’s labour force, so that it creates new opportunities for all sections of the society.”
The World Bank describes it as “rapid and sustained poverty reduction that allows people to contribute to and benefit from economic growth.”
The Eleventh Five-Year Plan (2007–12) first highlighted “Inclusive Growth” as a key objective, underscoring that high GDP growth must be accompanied by equitable opportunities, reduction in poverty, and access to essential services.
Elements of Inclusive Growth
Inclusive growth is multidimensional and requires several enabling factors:
- Employment Generation: Growth must create sufficient quality jobs, especially in labour-intensive sectors, to absorb India’s vast workforce.
- Poverty Reduction: Economic expansion should lift people out of poverty by enhancing income opportunities and access to basic needs.
- Financial Inclusion: Ensuring access to credit, savings, insurance, and banking services for marginalized communities.
- Agricultural Growth: As agriculture employs more than 40% of India’s population, inclusive growth demands investments in irrigation, rural infrastructure, and fair prices for farmers.
- Education and Skill Development: Universal access to quality education and vocational training equips individuals to participate in growth processes.
- Health and Nutrition: Healthy populations are more productive. Inclusive growth requires robust healthcare infrastructure, nutrition security, and reduced child malnutrition.
- Gender Equity: Women’s empowerment, workforce participation, and access to resources are vital for inclusive outcomes.
- Regional Balance: Growth must bridge rural-urban divides and reduce inter-state disparities in income and development.
Salient Features of Inclusive Growth
- Broad-based and Equitable: Benefits must reach all strata, especially marginalized groups.
- Participatory: People should actively contribute to and benefit from growth processes.
- Pro-poor and Pro-women: Special emphasis on poverty alleviation and gender equity.
- Employment-Oriented: Focus on labour-intensive sectors to generate jobs.
- Human Capital Development: Strong investments in health, education, and skill-building.
- Social Protection: Safety nets for vulnerable groups to cushion against shocks.
- Regional Balance: Reduction of inter-regional disparities through infrastructure and targeted schemes.
- Environmentally Sustainable: Growth aligned with ecological protection and sustainable practices.
Inclusive Growth and Issues Arising from It
While India has witnessed robust GDP growth, the inclusivity of this growth has often been questioned. Some issues arising are:
- Jobless Growth: Much of India’s recent growth has been capital-intensive, with limited employment generation.
- Income Inequality: Rising concentration of wealth in the hands of a few has widened the rich-poor divide.
- Regional Disparities: Southern and western states perform better economically, while central and eastern states lag behind.
- Exclusion of Marginalized Groups: Scheduled Castes, Scheduled Tribes, women, and informal sector workers remain underrepresented in growth outcomes.
- Low Human Development Indicators: Despite high GDP, India ranks low on the Human Development Index (130th in 2023) due to poor health and education outcomes.
Can Capitalism Bring Inclusive Growth?
Capitalism is an economic system based on private ownership, competition, and profit-making. It promotes innovation, efficiency, and overall growth. However, it often creates inequality and concentrates wealth in a few hands.
- Positives: Capitalism helps generate resources for government spending, creates jobs, and improves productivity.
- Negatives: Without control, it can exclude weaker sections, encourage exploitation, and increase the rich–poor divide.
Therefore, capitalism alone cannot ensure inclusive growth. To make it inclusive, governments must provide rules, welfare schemes, and redistribution measures like progressive taxes, social security, labour rights, and better health and education facilities. A mixed economy model—like India’s—tries to combine the growth potential of capitalism with the equity of socialism.
Challenges of Inclusive Growth in India
- Demographic Pressure: With over 1.4 billion people, providing quality jobs and services is a herculean challenge.
- Agricultural Distress: Fragmented landholdings, low productivity, and farmer indebtedness limit rural prosperity.
- Informal Sector Dependence: Nearly 80–85% of India’s workforce is in the informal sector with no social security.
- Skill Deficit: A mismatch between industry requirements and skills of youth hampers employability.
- Gender Inequality: Low female labour participation, wage disparity, and cultural barriers restrict inclusivity.
- Infrastructure Gaps: Rural areas lack adequate roads, power, healthcare, and digital access.
- Governance and Leakages: Corruption, red-tapism, and poor delivery mechanisms dilute welfare schemes.
- Climate Change: Environmental degradation disproportionately affects the poor, making growth unsustainable.
- Weak civic responsibility and social attitudes – Lack of civic sense, disregard for rules, low tax compliance, and neglect of public goods (like sanitation, cleanliness, and infrastructure) reduce the effectiveness of welfare schemes, increase costs of governance, and slow down inclusive development.
Inclusive Growth and Sustainable Development
Inclusive growth and sustainable development are interlinked concepts.
- Inclusive Growth emphasizes participation and equitable distribution of growth benefits.
- Sustainable Development stresses meeting present needs without compromising future generations.
For India, achieving both requires:
- Transition to renewable energy and green jobs.
- Inclusive urbanization with affordable housing and transport.
- Climate-resilient agriculture for food security.
- Conservation of natural resources along with community participation.
- Policies that integrate economic, social, and environmental goals.
Thus, inclusive growth that disregards sustainability will be short-lived, while sustainability without inclusivity may deepen inequalities.
Recent Government Incentives for Inclusive Growth
PM Dhan-Dhaanya Krishi Yojana – Improves crop diversification, irrigation, and post-harvest infrastructure in low-productivity districts.
MSME & Marginalised Entrepreneur Support – Credit guarantee, loans, and support for women, SC/ST, and first-time entrepreneurs.
Enhanced Kisan Credit Card (KCC) – Loan limit raised from ₹3 lakh to ₹5 lakh for farmers, fishers, and dairy farmers.
Sashakt Anganwadi & Poshan 2.0 – Nutrition and health support for children, adolescent girls, and mothers.
Social Security for Gig/Platform Workers – Registration via e-Shram, inclusion under health insurance schemes.
SWAMIH Fund 2 – Completes stalled affordable and mid-income housing projects.
Bharatiya Bhasha Pustak Scheme – Digital books in Indian languages to promote vernacular education.
Food & Agriculture Missions – Programs for pulses, edible oils, and vegetables to boost farmer income and food security.
Subhadra Yojana (Odisha) – ₹50,000 assistance over five years for women from poor households.
Yuva Nidhi (Karnataka) – Monthly allowance for unemployed graduates and diploma holders.
Mission Shakti 5.0 (UP) – Women’s empowerment through education, health, and safety measures.
Namo Netra Sanjeevani (Maharashtra) – Free vision care, surgeries, and spectacles for rural and tribal populations.
Conclusion
Inclusive growth is not just about ethics; it is essential for India’s stability. If growth is not inclusive, it can lead to inequality, unrest, and instability. To use its demographic dividend, reduce poverty, and meet the Sustainable Development Goals, India needs policies that give everyone fair access to opportunities, resources, and the benefits of growth.
12 Practice MCQs on Inclusive Growth
1. Which of the following best defines Inclusive Growth?
a) Growth focused only on GDP increase
b) Growth that is broad-based, equitable, and participatory
c) Growth limited to industrial sectors
d) Growth achieved only through foreign investment
Answer: b) Growth that is broad-based, equitable, and participatory
2. The concept of “Inclusive Growth” was first highlighted in India in which Five-Year Plan?
a) Ninth Plan
b) Tenth Plan
c) Eleventh Plan
d) Twelfth Plan
Answer: c) Eleventh Plan
3. Which of the following is NOT an element of inclusive growth?
a) Employment generation
b) Financial inclusion
c) Regional disparity
d) Human capital development
Answer: c) Regional disparity
4. “Growth without inclusivity is hollow, while inclusivity without growth is unsustainable.” This statement implies:
a) Growth and inclusivity can be pursued separately
b) Both growth and inclusivity must complement each other
c) Inclusivity is more important than growth
d) Growth is more important than inclusivity
Answer: b) Both growth and inclusivity must complement each other
5. Which of the following groups is often left out in India’s growth process?
- Scheduled Castes and Scheduled Tribes
- Informal sector workers
- Women
- Wealthy urban elites
Options:
a) 1, 2 and 3 only
b) 2 and 4 only
c) 1 and 4 only
d) 1, 2, 3 and 4
Answer: a) 1, 2 and 3 only
6. Which of the following can capitalism ensure by itself?
a) Equity and justice
b) Innovation and efficiency
c) Reduction of inequality
d) Social security
Answer: b) Innovation and efficiency
7. Consider the following:
- Agriculture growth
- Job creation
- Human capital development
- Gender equity
Which of the above are crucial for inclusive growth?
a) 1 and 2 only
b) 1, 2 and 3 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4
Answer: d) 1, 2, 3 and 4
8. Which of the following is a major challenge to inclusive growth in India?
a) High industrial productivity
b) Wide digital penetration
c) Demographic dividend
d) Dependence on informal sector employment
Answer: d) Dependence on informal sector employment
9. Which of the following best describes the relationship between Inclusive Growth and Sustainable Development?
a) They are contradictory goals
b) Sustainability ensures inclusivity automatically
c) Inclusive growth without sustainability is short-lived
d) Inclusive growth is only economic, sustainability is only environmental
Answer: c) Inclusive growth without sustainability is short-lived
10. Which of the following is a salient feature of inclusive growth?
a) Growth focused mainly on urban areas
b) Reduction of regional imbalances
c) Increasing capital-intensive industries
d) Prioritizing profit maximization
Answer: b) Reduction of regional imbalances
11. Which sector employs the maximum workforce in India and is thus crucial for inclusive growth?
a) Services
b) Manufacturing
c) Agriculture
d) Construction
Answer: c) Agriculture
12. Which of the following Sustainable Development Goals (SDGs) align most directly with inclusive growth?
- No Poverty (SDG 1)
- Quality Education (SDG 4)
- Decent Work and Economic Growth (SDG 8)
- Reduced Inequalities (SDG 10)
Options:
a) 1, 2 and 3 only
b) 1, 3 and 4 only
c) 2 and 4 only
d) 1, 2, 3 and 4
Answer: d) 1, 2, 3 and 4