My Take On Inclusive Growth : A Myth or Reality ?

I recently spoke about Inclusive Growth at Indian School Of Business, Hyderabad, where I was invited to speak as part of the Dean Speaker Series. Read on to see how inclusive growth could work for our development.
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\  Speaking as a part of ISB's Dean Speaker Series

Why Inclusive growth ? It’s been around two and a half years that I’ve been in NITI Aayog. My relationship with economics was pretty minimal, mostly related to project assessment of various activities in DRDO, in terms of costs ie. how much it would cost to develop a particular product , and sometimes to plan on it’s commercialisation if it were to go on the market. 

But, moving to NITI Aayog has introduced me to a huge number of great economists, including the stellar Dr. Arvind Panagariya who was the Vice-chairperson of NITI Aayog and many others. The conjecture in theses economic circles was usually full of microeconomic and macroeconomic analysis , while I as a scientist, wondered how the dots connected to science in the midst of these discussions. 

• There was a sort of ‘chasm’ between us as each time I heard the term ‘ free market economy’ , ‘market driven’ , ‘demand driven economy’ ; the examples set for me were always either China or USA in terms of role models for economic progression. These discussions usually never involved the terms ‘ indigenous production’ or manufacturing. It was only when the Prime Minister held a meeting recently with the scientists that I realized that there was hope for science for societal benefits.

So are we chasing economic growth or economic development ?

This is when we pursued the idea of inclusive growth - to pursue economic development as a selected agenda, rather than as an inadvertent after-thought .
Now, inclusive growth is something that creates opportunities for growth for all segments of population and distributes dividends of increased prosperity (including both monetary and non-monetary benefits) fairly across society. (as defined by OECD)

Put simply, it focusses on economic development rather than economic growth .

                                   

Various perspectives on Economic Growth

A lot of definitions for the term inclusive growth have emerged but all reiterate that it is the sum of both Outcomes & Processes that play a pivotal role in it.

Now, while growth still remains the pivotal determinant of any poverty reduction attempt, inclusive growth also focusses on redistribution.


A traditional framework to think about inclusive growth would be
GDP  - GDP is a key/major indicator of overall growthEmphasis on material living standards - Income as an indicator of well-being and progressionAttention to the representative agent - Focus on averages ie. per capita

Whereas, if we’re to move beyond and look at a more holistic approach to inclusive growth,
The key focus is on well-being as the primary indicator of performanceIt is multi-dimensional in nature ie. it accounts for both income and non-monetary indicators of well-being. (health, education, employability)Attention is paid to the impact of distribution ie. how different social (and economic groups) 

Therefore, the parameters that decided inclusive growth are Community DevelopmentEconomic DevelopmentLand use and InfrastructureEducationDevelopment of the Workforce who will directly contribute to growth
All these indicators contribute to inclusive growth in its totality. Economic growth, now, has three perspectives:
Balanced growthSustainable growthInclusive growth


In the next part of this series, I will talk about the difference between economic growth and development and where our efforts must be directed towards, inclusive, sustainable growth.