Inclusive Growth & Issues Arising From It – Conceptual Framework (Block 1)

GS III • Indian Economy • Inclusive Growth • Development • Equity

1. What Is Inclusive Growth?

In simple terms, inclusive growth means growth that is broad-based across sectors and includes a large share of the country’s labour force and population, especially the poor, vulnerable and marginalised groups.

It is not enough for GDP to rise; growth must also create decent jobs, reduce poverty and inequality, improve access to basic services and ensure that regions, genders, castes and communities are not left behind.

Why Inclusive Growth Matters in India

• Large share of population still in poverty / vulnerable non-poor
• High levels of informal employment and underemployment
• Regional imbalances – BIMARU states, aspirational districts
• Persistent social inequalities – caste, gender, rural–urban
• Demographic dividend can turn into burden unless growth is job-rich and inclusive

★ IASNOVA.COM ★

2. Growth vs Pro-Poor Growth vs Inclusive Growth

UPSC often expects you to distinguish between ordinary growth, pro-poor growth and inclusive growth. These are related but not identical concepts.

graph LR

  WM[IASNOVA.COM]:::wm

  A[Patterns of Growth]:::root --> B[Conventional Growth]:::node
  A --> C[Pro-Poor Growth]:::node
  A --> D[Inclusive Growth]:::node2

  B --> B1[GDP ↑ but may widen inequality]:::note
  C --> C1[Poverty falls, but others may still be excluded]:::note
  D --> D1[Growth + Equity + Access for all]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef node2 fill:#FDEDEC,stroke:#B03A2E,color:#7B241C;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

3. Core Pillars / Dimensions of Inclusive Growth

Inclusive growth is multi-dimensional. For answers, it helps to organise it into 5–6 clear pillars.

Common Pillars (Use as Answer Headings)

• 1. Sustained, Broad-Based Growth – across agriculture, manufacturing, services
• 2. Productive & Decent Employment – especially for youth, women and informal workers
• 3. Human Development – education, health, nutrition, skills
• 4. Social Inclusion & Equity – caste, gender, region, disability, minorities
• 5. Financial & Digital Inclusion – access to credit, payments, digital infrastructure
• 6. Good Governance & Voice – participation, transparency, accountability

graph TB

  WM[IASNOVA.COM]:::wm

  A[Inclusive Growth]:::root --> B[Growth & Productivity]:::node
  A --> C[Employment]:::node
  A --> D[Human Development]:::node
  A --> E[Social Inclusion]:::node
  A --> F[Financial & Digital Inclusion]:::node
  A --> G[Governance]:::node

  D --> D1[Education, health, nutrition]:::note
  E --> E1[Caste, gender, region equity]:::note
  F --> F1[Banks, UPI, DBT access]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

4. India’s Policy Framework for Inclusive Growth

India’s development strategy gradually shifted from “growth first, distribution later” to “growth with inclusion”. Various plans and policy documents explicitly adopted inclusive growth as a goal.

Key Stages

• Early Plans – focus on growth, industrialisation, self-reliance; inclusion mainly via community development and land reforms.
• Post-1970s – “Garibi Hatao”, targeted poverty programmes, rural employment schemes.
• Eleventh Plan (2007–12) – explicitly titled “Faster and More Inclusive Growth”.
• Twelfth Plan (2012–17) – theme of “Faster, More Inclusive and Sustainable Growth”.
• NITI Aayog Era – emphasis on Sabka Saath, Sabka Vikas, Sabka Vishwas, SDGs, Aspirational Districts, JAM trinity.

graph TD

  WM[IASNOVA.COM]:::wm

  A[India's Inclusive Growth Strategy]:::root --> B[Planning Era]:::node
  A --> C[Eleventh & Twelfth Plans]:::node
  A --> D[NITI Aayog & SDGs]:::node2

  B --> B1[Growth + Poverty schemes]:::note
  C --> C1[Explicit inclusive growth theme]:::note
  D --> D1[Sabka Vikas, Aspirational Districts]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef node2 fill:#FDEDEC,stroke:#B03A2E,color:#7B241C;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

5. Channels Through Which Growth Becomes Inclusive

In mains answers, it helps to show “how” growth can translate into inclusion. Think in terms of channels.

Key Channels

• Employment Channel – growth leads to more and better jobs (wages, security, rights).
• Fiscal Channel – higher growth → higher tax base → more social spending (health, education, welfare).
• Productivity Channel – investment in human capital and infrastructure raises productivity.
• Access Channel – digital & financial inclusion (JAM, UPI, DBT) ensures benefits reach the last mile.
• Voice & Governance Channel – decentralisation, transparency, citizen participation improve targeting.

graph TB

  WM[IASNOVA.COM]:::wm

  A[Economic Growth]:::root --> B[Jobs & Incomes]:::node
  A --> C[Govt Revenues]:::node
  A --> D[Investment in People]:::node
  A --> E[Infrastructure & Access]:::node

  B --> B1[Employment Channel]:::note
  C --> C1[Fiscal Redistribution]:::note
  D --> D1[Productivity Channel]:::note
  E --> E1[Access & Inclusion Channel]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

6. Measuring Inclusiveness – Beyond GDP

To show that growth is inclusive, we need indicators that capture distribution and access, not just aggregate GDP numbers.

Important Indicators

• Poverty – headcount ratio, multidimensional poverty
• Inequality – Gini coefficient, Palma ratio, income/wealth shares
• Human Development – HDI, literacy, IMR, life expectancy
• Access Indicators – bank accounts (PMJDY), electricity, sanitation, internet, drinking water
• Labour Market – unemployment, LFPR, share of formal/informal jobs

graph LR

  WM[IASNOVA.COM]:::wm

  A[Measuring Inclusiveness]:::root --> B[Poverty]:::node
  A --> C[Inequality]:::node
  A --> D[Human Development]:::node
  A --> E[Access & Jobs]:::node

  B --> B1[Headcount, MPI]:::note
  C --> C1[Gini, income shares]:::note
  D --> D1[HDI, literacy, IMR]:::note
  E --> E1[Banking, internet, employment]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

Inclusive Growth – India’s Challenges, Issues & Policy Responses (Block 2)

GS III • Indian Economy • Growth, Development & Equity

7. Issues Arising from Lack of Inclusiveness in Growth

India has achieved high economic growth in several phases, but this growth has not always translated into equal opportunities across social groups, sectors and regions. This section examines the main issues that arise when growth is not inclusive.

A. High Inequality

• Income and wealth inequality rising since 1990s liberalisation phase
• Top 1% holds a disproportionately high share of wealth (Oxfam, WID reports)
• Urban–rural divide widening
• Inequality in access to quality education, health and digital technologies

B. Jobless and K-Shaped Growth

• Growth concentrated in capital-intensive services; employment generation weak
• Manufacturing share stagnant; labour-intensive sectors not expanding enough
• Post-pandemic K-shaped recovery widened class divide
• LFPR (especially female) remains low

C. Regional Imbalances

• BIMARU states lag in health, education and job opportunities
• Southern and western states attract bulk of investment
• Aspirational districts show persistent multi-dimensional deprivation

D. Social Exclusion

• Caste-based occupational segregation still strong
• Gender gaps in wages, LFPR, asset ownership
• Minorities and tribal groups face mobility barriers

E. Infrastructure & Human Development Gaps

• Learning poverty, nutritional deficits, informal healthcare
• Uneven access to electricity, drinking water, sanitation, internet
• Rural infrastructure still weak in many states

graph TB

  WM[IASNOVA.COM]:::wm

  A[Issues from Non-Inclusive Growth]:::root --> B[Inequality]:::node
  A --> C[Jobless Growth]:::node
  A --> D[Regional Imbalance]:::node
  A --> E[Social Exclusion]:::node
  A --> F[HD & Infrastructure Gaps]:::node

  B --> B1[Income, wealth, opportunities]:::note
  C --> C1[Youth unemployment, low LFPR]:::note
  D --> D1[BIMARU vs developed states]:::note
  E --> E1[Caste, gender, minority exclusion]:::note
  F --> F1[Nutrition, education, healthcare gaps]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

8. Why Despite High Growth, Inclusion Has Lagged – Structural Causes

A. Structural Dualism

• Coexistence of high-productivity modern sector and low-productivity informal sector
• 70–80% of Indian workforce remains informal
• Lewis model transition incomplete

B. Skill Mismatch

• Large youth population but skill levels below industry needs
• Employability challenges → low wages & informal work

C. Weak Manufacturing Base

• Premature deindustrialisation
• Manufacturing’s GDP share stagnant around 16–17%
• Insufficient labour-intensive industry expansion

D. Agricultural Stress

• Low productivity, disguised unemployment, small holdings
• Rural poverty remains high
• Climate vulnerabilities increasing

E. Low Human Capital Investment

• Public spending on health ~1.3% of GDP
• Learning outcomes weak despite high enrollment
• Malnutrition, stunting, anaemia persist

graph LR

  WM[IASNOVA.COM]:::wm

  A[Why Inclusion Lags]:::root --> B[Dual Economy]:::node
  A --> C[Skill Mismatch]:::node
  A --> D[Weak Manufacturing]:::node
  A --> E[Agrarian Stress]:::node
  A --> F[Human Capital Gaps]:::node

  B --> B1[Informal workforce majority]:::note
  E --> E1[Climate & productivity issues]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

9. Policy Responses for Inclusive Growth – India’s 360° Strategy

To correct imbalances, India follows a multi-pronged inclusive growth strategy integrating economic, social and governance reforms.

A. Employment-Focused Growth

• PLI scheme to boost manufacturing
• Cluster development for MSMEs
• Infrastructure push → construction jobs
• Gig & platform workers policy in pipeline

B. Financial & Digital Inclusion

• PMJDY – 50+ crore bank accounts
• UPI – world’s largest real-time payment system
• DBT – direct benefit transfers reduce leakage
• Digital India, BharatNet

C. Social Sector Investment

• Ayushman Bharat – health protection
• PM Poshan, Poshan 2.0 – nutrition
• NEP 2020 – education reforms
• PM Awas Yojana – housing inclusion

D. Regional Equity Agenda

• Aspirational Districts Programme
• North-East development programmes
• Backward regions development

E. Social Justice Measures

• SC/ST sub-plans
• Gender budgeting
• Minority & tribal welfare programmes

graph TB

  WM[IASNOVA.COM]:::wm

  A[India's Inclusive Growth Strategy]:::root --> B[Employment Focus]:::node
  A --> C[Financial & Digital Inclusion]:::node
  A --> D[Social Sector]:::node
  A --> E[Regional Equity]:::node
  A --> F[Social Justice]:::node

  C --> C1[UPI, DBT, PMJDY]:::note
  D --> D1[Health, Education, Nutrition]:::note
  E --> E1[Aspirational Districts]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★

10. Way Forward – Making Growth Truly Inclusive

Key Reform Priorities

• Labour market reforms targeting formalisation
• Boost labour-intensive manufacturing (textiles, footwear, electronics)
• Raise public spending on health & education
• Strengthen skilling → match industry needs
• Expand digital infrastructure in rural areas
• Address regional imbalance through customised development plans
• Improve ease of doing business for MSMEs
• Strengthen social security for informal workers

graph LR

  WM[IASNOVA.COM]:::wm

  A[Way Forward]:::root --> B[More Jobs]:::node
  A --> C[Better Human Capital]:::node
  A --> D[Regional Balance]:::node
  A --> E[Social Protection]:::node

  B --> B1[Skilling & manufacturing push]:::note
  C --> C1[Stronger health + education]:::note
  D --> D1[Targeted regional planning]:::note
  E --> E1[Support for informal workforce]:::note

  classDef root fill:#D4EFDF,stroke:#1E8449,color:#145A32;
  classDef node fill:#EBF5FB,stroke:#2874A6,color:#1B4F72;
  classDef note fill:#F5F6F7,stroke:#B3B6B7,color:#424949;
  classDef wm fill:#FFFFFF,stroke:#FFFFFF,color:#FF0000,font-weight:900,font-size:11px;

★ IASNOVA.COM ★