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GS Paper: GS3-02.Inclusive growth and issues therein

  • With a consideration towards the strategy of inclusive growth, the new Companies Bill, 2013 has indirectly made CSR a mandatory obligation. Discuss the challenges expected in its implementation in right earnest. Also discuss other provisions in the Bill and their implications

  • Capitalism has guided the world economy to unprecedented prosperity. However, it often encourages shortsightedness and contributes to wide disparities between the rich and the poor. In this light, would it be correct to believe and adopt capitalism driving inclusive growth in India? Discuss.

  • What are ‘Smart Cities’? examine their relevance for urban development in India. Will it increase rural-urban differences? Give arguments for ‘Smart Villages’ in the light of PURA and RURBAN Mission.

  • Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your option.

  • Comment on the challenges for inclusive growth which include careless and useless manpower in the Indian context. Suggest measures to be taken for facing these challenges

  • What are the salient features of ‘inclusive growth’? Has India been experiencing such a growth process? Analyze and suggest measures for inclusive growth.

  • It is argued that the strategy of inclusive growth is intended to meet the objectives of inclusiveness and sustainability together. Comment on this statement.

    As per OECD, inclusive growth is economic growth distributed fairly across society and creates opportunities for all.

    Inclusive Growth Promoting Inclusiveness

    Expands economic opportunities with focus on education, health, skilling, and access to markets. Eg- PM-JANMAN for tribal inclusion.

    Balanced regional growth with targeted interventions.

    Income security – Social protection systems like MGNREGA, NFSA, PM-KISAN reduce vulnerability and support inclusive livelihoods.

    Strengthens financial inclusion – Eg- PM Jan Dhan Yojana opened 500 million+ bank accounts

    Equality of Opportunity – Eg- the Rights of Persons with Disabilities (RPwD) Act, 2016

    Ayushman Bharat: Provided free healthcare to 23 crore people.

    Inclusive Growth Ensuring Sustainability

    Affordable and clean energy (SDG 7) – PM Ujjwala Yojana distributed 10 crore LPG connections

    Encourages sustainable consumption and production patterns (SDG 12). Eg- Mission LiFE

    Supports protection of natural resources-forests, soil, and biodiversity (SDG 15). Eg: Compensatory Afforestation Funds

    Sustainable Livelihoods – Promotes climate-resilient agriculture, water conservation, and diversified livelihoods.

    Institutional Sustainability (SDG 16, SDG 17) through decentralisation, cooperative federalism and data-driven governance. Eg- Aspirational Districts Programme.

    Interlinking between Inclusiveness and Sustainability

    Inequality weakens long-term economic growth

    Environmental degradation hits the poorest hardest – Eg- Disaster induced Migration

    Inclusive growth strengthens environmental stewardship

    Sustainable livelihoods reduce vulnerability

    Intergenerational equity depends on both

    Challenges to Inclusive Growth under a Market Economy

    Rising inequality– Eg- the top 1% control 40% of net personal wealth.

    Regional disparities due to unequal investment and infrastructure. Eg- BIMARU States

    Jobless growth – Service sector contributes 55% of GDP but employs less than 30% workforce

    Weak social protection for informal workers (over 85% of India’s workforce).

    Market failures in public goods. Eg- Digital Apartheid in Education

    Way Forward

    Capability Approach (Amartya Sen) – increase Education and health spending to 6% and 2.5% of GDP respectively

    Strengthen progressive taxes, wealth taxes and targeted subsidies to reduce income inequality and expand welfare spending.

    Align national policies with Paris Agreement targets

    Universalise social security, pensions, maternity benefits, and unemployment allowance

    A nexus approach towards sustainability and inclusiveness is needed for ‘Sabka Saath, Sabka Vikas.’

  • Explain intra-generational and inter-generational issues of equity from the perspective of inclusive growth and sustainable development.

    Inclusive growth and sustainable development emphasise fair distribution of opportunities, resources, and benefits both within the present generation and across future generations.

    Intra-Generational Equity issues (Equity Within the Present Generation)

    Income and Wealth Inequality – the top 1% of adults in India control almost 40% of net personal wealth. (World Inequality Report)

    Social Exclusion – Caste, gender, disability, and minority identity restrict access to education, jobs, assets. Eg- Glass Ceiling for Women

    Poorer communities face greater vulnerability to pollution, floods, heatwaves, violating equity. Eg- Disaster induced migration

    Regional disparities – Eg- BIMARU States lag behind national averages in health, education and income.

    Low female labour force participation (41% vs 48% global average) limits inclusive access to economic opportunities.

    Inter-Generational Equity issues (Equity Across Future Generations)

    Climate change burden on future generations – Eg- Rising sea levels threatening the survival of low-lying island countries.

    Low social mobility- Eg – India ranks 76th in the Global Social Mobility Index (WEF), indicating persistence of inequality across generations.

    Failing to invest in research, innovation, and human capital reduces competitiveness of future generations. (R&D investment only 0.7% of GDP)

    Fiscal Burden – Unsustainable borrowing today limits fiscal space for future welfare and development spending.

    Way Forward

    Capability Approach (Amartya Sen) – increase Education and health spending to 6% and 2.5% of GDP respectively

    Strengthen progressive taxes, wealth taxes and targeted subsidies to reduce income inequality and expand welfare spending.

    Align national policies with Paris Agreement targets

    Universalise social security, pensions, maternity benefits, and unemployment allowance

    A nexus approach towards sustainability and inclusiveness is needed for ‘Sabka Saath, Sabka Vikas.’

  • “Investment in infrastructure is essential for more rapid and inclusive economic growth.”Discuss in the light of India’s experience

    The World Bank defines infrastructure as “the basic physical and organizational structures and facilities needed for the operation of a society, enterprise, or system.” It is prerequisite for rapid, inclusive and sustainable growth.

    Importance of Investment in Infrastructure for Rapid Growth

    A 1% increase in infrastructure investment can raise output by 0.4% in the same year and by 1.5% in 4 years. (IMF)

    Modern transport, logistics and energy infrastructure reduce time and transaction costs and increase competitiveness.

    Boosts Manufacturing & Exports – Eg- Port led development under Sagarmala project

    Crowds in domestic private investment and FDI –

    Facilitates Urbanisation and industrialization- Eg- industrial corridors, and smart cities support agglomeration economies and higher output.

    Energy Security through investments in renewables (48 % of the total installed capacity).

    Importance of Investment in Infrastructure for Inclusive Growth

    Bridges Rural-Urban Divide- Rural roads, irrigation networks and decentralised energy systems enhance market access and livelihoods. Eg- PMGSY

    Access to Basic Services – Water supply, sanitation, healthcare facilities, and DPI ensure equitable access for vulnerable groups. Eg- Jal Jeevan Mission

    Balanced Regional Growth- Connectivity in tribal, hilly, and northeastern regions improves mobility, education access, and economic opportunity.

    Employment Generation for low-skilled and semi-skilled workers. Eg- The PM Gati Shakti initiative is expected to create 1 crore+ jobs by 2030.

    Improves standard of living – Eg- over 4Cr houses constructed under PMAY

    Women Empowerment – Eg- SBM improving access to sanitation

    India’s Experience – Achievements and Challenges

    India has the second largest road network in the world (1.5 lakh km National Highway)

    Ports & Logistics: Sagarmala increased port capacity beyond 2,600 MTPA.

    Digital Infrastructure: Aadhaar, UPI, BharatNet deepened digital inclusion.

    Energy: Renewable capacity crossed 240+ GW, improving energy security.

    Challenges

    Lack Of Integrated Policy- India has the second largest infrastructure deficit in the world (after Brazil)

    Financing Constraints: NIP requires Rs 111 lakh crore.

    Delays in Land Acquisition & Clearances slowing project execution. Eg- Mumbai Metro

    Urban Infrastructure Deficits: Eg- 17% population living in slums

    Logistics Inefficiencies: 13-14% logistics cost compared to 8-10% global average

    Poor concession agreements and litigation in PPP projects

    Neglect of social infrastructure – Eg- health and education spending at 1.9% and 4% of GDP only

    Inadequate R&D expenditure (0.7% of GDP) hinder the adoption of innovative solutions.

    Way Forward

    Strengthen PPP Models with better risk-sharing and transparent concession agreements. (Kelkar Committee recommendations)

    Accelerate Gati Shakti Platform for integrated planning and faster clearances.

    Increase Sustainable Financing via green bonds, NIIF, and development finance institutions.

    Focus on Climate-Resilient Infrastructure in coastal, drought-prone and flood-prone regions.

    Sustainable and high-quality infrastructure is a essential for realisation of a $40 Trillion economy by 2047.

  • Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.

    As per OECD, inclusive growth is economic growth distributed fairly across society and creates opportunities for all. A market economy drives efficiency and innovation, but without corrective policies it can widen inequalities.

    Inclusive Growth under Market Economy

    Efficient Resource Allocation- improve productivity, reduce costs, and expand economic opportunities.

    Market economies enable entrepreneurship, MSME growth and innovation-driven jobs. Eg- Indian start-up ecosystem.

    State as an Enabler- Government gets resources to invest in public goods.

    Property rights, contract enforcement and regulatory frameworks ensure fairness.

    Technological development enabling inclusive development – Eg- DBT.

    Challenges to Inclusive Growth under a Market Economy

    Rising inequality– Eg- the top 1% control 40% of net personal wealth.

    Regional disparities due to unequal investment and infrastructure. Eg- BIMARU States

    Jobless growth – Service sector contributes 55% of GDP but employs less than 30% workforce

    Weak social protection for informal workers (over 85% of India’s workforce).

    Market failures in public goods. Eg- Digital Apartheid in Education

    Significance of Financial Inclusion in Achieving Economic Growth in India

    Enhanced credit access for MSMEs, SHGs – boosts investment and employment. Eg. PM MUDRA has sanctioned over since inception.

    Greater savings through Jan Dhan accounts (53 crore accounts) ensures financial stability

    Formalisation of the economy via UPI, GSTN, Aadhaar – wider tax base and better compliance.

    Poverty reduction through targeted DBT, eliminating leakages and improving consumption.

    Women’s economic empowerment through SHG-bank linkage, Stand-Up India, digital microcredit – raises household productivity.

    Rural economic growth through Kisan Credit Cards, PM-Kisan and digital banking in villages.

    Improved risk management via insurance (PMJJBY, PMSBY) and pensions (PM-SYM) – stabilises vulnerable households.

    Boost to digital economy with UPI handling over – strengthens service sector growth.

    Inclusive growth under a market economy is possible when markets are balanced with public investment, regulation and financial inclusion.