True Growth Is Inclusive

It might be counterintuitive to realize how much of a difference, in terms of the development

policies of a country, the word 'inclusive' makes when added to 'growth'. Well, it creates an
enormous difference. Growth by itself supports the idea of free, unregulated markets and inclusive
growth reuires conscious effort on part of the government to control market forces and protect the
interests of disadvantaged sections of society. !ll differences between the two boil down to how the
respective policies affect disadvantaged sections of society and deal with ineuality between the
haves and have"nots.
In his The Wealth of Nations, !dam #mith made the first case for free market fundamentalism by
defining the invisible hand as the unobservable market force that helps the demand and supply of
goods to reach euilibrium automatically. The theory suggests that, left to its own without
government intervention, the free market will supply goods and services to customers at the lowest
possible price and best uality. The invisible hand theory also suggests that if everyone acts with
the motive of ma$imising private profit, they will automatically achieve what is best for society.
%ore recently, in the &'()s, the *uznets +urve propounded that ineuality increases initially and
then decreases with increase in per capita income in. The inverted","shaped curve is believed to
have sparked -ohn .. *ennedy's comment/ 0The rising tide lifts all boats.1 !ll these theories
support the pursuit of fast"paced growth for countries and assure that the benefits of growth 'trickle
down' to all sections of society.
*uznets +urve
The only problem with trickle"down economics, as history has shown, is that it doesn't work" at
least to the e$tent its supporters believe it should. The percolation and scale of trickle down is
e$tremely limited and free"market economies are greatly biased towards advantaged sections of
society. e.g. !ccording to noted economist, 2mmanuel #aez, '(3 of the gains in the ,# economy's
recovery from the economic depression has been to the top &3 income"group 4+ronin5. !lso, the
invisible hand doesn't seem to create much good either as shown by the economic meltdown in
6))7 caused by unregulated markets that became to unstable to sustain. The effects have been felt
all over the world, with countries still trying to recover. The ,#, the epicentre of the storm, has a
national debt of 8&9.( trillion while G:; stands at 8&<.6 trillion 4.ilger5. In India too, pro"growth
economics have caused ma=or havoc. India has seen a remarkable growth rate over the past decade,
second only to +hina, the ma=ority population is in tatters. !bout <))%n people defecate in the
open 4;TI5 and 9(3 of the population lives on less than 86 a day 42conomist >nline5. The Green
?evolution" essential in providing food security to citizens" has caused disastrous effects in some
spheres due to its unregulated nature. e.g. >verconsumption of water and heavy use of pesticides in
;un=ab has led to the local population living in a heavily to$ic environment with the groundwater
table disastrously low@ ;un=ab faces uranium poisoning in its water which is ()3 more than WA>
guidelines 4#engupta5.
'Inclusive growth' simply means focussing on growth that allows every participant of the economy
to benefit euitably and sustainably. This means considering the poor, socially disadvantaged and
the environment when forming economic policies. The market only recognizes buyers, not citizens.
!nd not all citizens have the potential to be buyers. #ome are victims of social e$clusion and
historical ineuality, such as :alits in India. #ome are born poor and are stuck in a poverty trap.
!nd it is these people who suffer the most whenever the country faces a crisis. Beglect of the
environment has also caused ma=or issues as seen in the e$ample about the Green ?evolution. In an
article titled, '#ynthesis of 2cology and 2conomics'. :r. %ihir #hah makes a strong case for
creating a more realistic economic model than the current where the environment is treated as a
perennial source and sink. Ae says, 0This dual conception of 'free gifts of nature' and the imperative
to e$ercise 'control over nature' runs through the entire gamut of thinking in economics1 4#hah5.
Bot taking an inclusive perspective towards growth causes social problems too e.g. Insurgent
movements when a people resort to violent action against the government because they have been
e$cluded from growth benefits for generations and been left to oppression amidst poverty. 2ven in
strict monetary terms, the I%. 4International %onetary .und5 recently proclaimed that 0ineuality
is a drag on growth1, positing data that showed the link between low ineuality and higher growth
levels 4Talley5.
It is important to realise that real growth is inclusive. !ny other form is an illusion because
neglected aspects haunt the country in the future. India has implemented some good policies such as
%GB?2G! 4%ahatma Gandhi Bational ?ural 2mployment Guarantee !ct5, %id"day meal scheme
and #arva #hiksha !bhiyan. These all have their loopholes and problems with implementation on
the ground. :isappointments with these programs, however, should not dissuade us from the
importance of government intervention. It should, in fact, make us work towards creating powerful
institutions which support such programs and empower people. The emergence of women self"help
groups 4#AGs5 is a good sign in this direction and is helping overcome many governmental
inadeuacies. The &6
th
.ive Cear ;lan includes a remarkable plan for water management that
involved partnership with locals and e$perts outside the government, while also focussing on
strengthening gram panchayats 4;lanning +ommission5. It is a very good e$ample of government
action towards inclusive development.
It has been shown that free"market fundamentalism has failed in solving problems of ineuality,
which in"turn affect economic growth adversely. The only way to achieve high, sustainable growth
is to let the government form inclusive policies that can provide more euitable benefits to all
citizens. Dy following such policies in education, poverty alleviation, environment preservation,
among others, India can ensure that it becomes a shining e$ample of growth, peace and
sustainability.
?eferences/
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Economics RSS. Wall #treet -ournal, n.d. Web. &) >ct. 6)&F.
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Web. &) >ct. 6)&F.
.ilger, #heldon. EThe ,.#. Bational :ebt/ +an The .ederal ?eserve ;erform .iscal !lchemy
.oreverHE The Huffington Post. TheAuffington;ost.com, 67 %ay 6)&F. Web. &) >ct. 6)&F.
;lanning +ommission. Twelfth Five Year Plan (!"#!"$%. Bew :elhi/ #age ;ublications, 6)&I.
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#hah, %ihir. E#ynthesis of 2cology and 2conomics.E (ST&R. 2conomic and ;olitical Weekly, 6)
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Talley, Ian. EI%. Warns Ineuality Is a :rag on Growth.E The Wall Street (ournal. :ow -ones J
+ompany, n.d. Web. &) >ct. 6)&F.