Inclusive Growth and Equitable Development: A Framework for Assessing Contributions

By Riya Jain & Abhinash Jena on November 19, 2024

Inclusive growth is an economic approach that ensures that economic progress benefits and opportunities are shared equally across all societal groups (Sut, 2018). Integrating the management and sustainability solutions, the inclusive growth concept helps address the economic, social, and environmental dimensions while supporting the need for sustainable development goals (SDG) (Nayak et al., 2024).

With the concept’s growing popularity, inclusive growth enables the reduction of inequalities and the fostering of social cohesion for providing disadvantaged and marginalized populations with equitable access to economic benefits, resources, and opportunities. The focus of an economy over inclusive growth includes various interconnected aspects such as financial inclusion, infrastructure, employment, health, and education (Sharma, 2019).

Despite the growth in popularity of the concept, the incorporation level of inclusive growth is different like in England’s devolution agreement, inclusive growth concern is often ignored (Sissons et al., 2018). However, in a country like Indonesia, policies for financial inclusion and education spending foster inclusive growth by having expansion of education access, providing affordable credit, and increasing human capital (Prabowo et al., 2022). Like Indonesia, India also has incorporated inclusive growth into its development plans (Sut, 2018). As it is not just a concept of increasing economic growth but also ensuring equitable benefits, it is essential to understand the inclusive growth status of an economy for better initiation of development plans.

Significance of equitable development

With the recognition of the progress of the economy as the sustainability-oriented aspect focused on economic, environmental, and societal growth, there has been a lot of focus on the integration of Sustainable Development Goals (SDG) stated by the United Nations Conference on Trade and Development (UNCTAD). However, one major challenge in the process of achieving Agenda 2030 is sustainable economic progress. To counter this, UNCTAD has developed an inclusive growth index which defines the sustainable growth of the countries (UNCTAD, 2024). The presence of elevated levels of inequality has been the main obstacle to poverty reduction and sustainable economic growth. The poverty gaps have been continuously widening with more than seven hundred million people living in extreme poverty around the world (UNCTAD, 2021).

Living conditions and inequalities in 2020
Living conditions and inequalities in 2020 (UNCTAD, 2024)

The living condition analysis shown in the above figure represents large disparities in regions due to a lack of opportunities. Most developed countries have scored more than 60, while other developing economies have scored below this. To reduce these inequalities there is a need to have equal opportunities available thus, equitable development and inclusive growth are essential.

Apart from supporting the overall SDG, particularly, inclusive it also helps in fulfilling SDG12 i.e. responsible consumption and production. The equitable access of the resources under inclusive growth helps in distributing the resources to the vulnerable groups too, thus, alignment of inclusive growth with SDG helps in deriving more social fairness and fulfilling the environmental sustainability responsibility of the company.

Status of Inclusive Growth in India

India’s economy is a mix of persistent poverty and growing wealth. The GDP growth has been from 7.41% in 2014 to 7.58% in 2023 showing economic expansion but without uniform expansion (WorldBank, 2024).

GDP growth rate of India

According to The Times of India (2024), inequality for urban and rural areas has reduced from 2011-12 to 2022-23 i.e. the value of the Gini coefficient has reduced from 0.283 to 0.266 for the rural sector while from 0.363 to 0.314 for the urban sector. Though there is a reduction in income inequality level the value of more than 0.3 for the urban sector still shows the persistence of moderate inequality. India ranks 62nd in the inclusive development index stated by the World Economic Forum for 72 emerging countries. This highlights that though India is on its way to becoming an economy of $5 trillion, economic inequalities are still a problem for India (Strategic Investment Research Unit (SIRU, 2022).

Government programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) employed 83.2 million people in FY 2023-24 (Mukherjee, 2024), but as these jobs are often low-wage or temporary, the need is of having more sustainable development opportunities. Also, the gender gap report of 2023 showed that out of 146 countries, India ranks 127 in gender parity and even women’s labour force participation is low, thus, efforts are required to reduce these inequalities and create an environment of more inclusive growth in India (The Hindu, 2023).

Best practices and standards

The promotion of equitable development requires the adoption of best practices and standards. Some of the relevant practices adopted in India are:

  • Financial inclusion promotion: India has focused on expanding access to banking services and credit for marginalized communities to promote inclusive growth (Gaur & Mishra, 2024). Many initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY) or the issuing of Kisan credit cards were done for the inclusion of individuals. By August 14, 2024, about 35.4 crore accounts were opened under PMJDY with deposits up to ₹2.31 trillion (Singh, 2024).
  • Employment generation programs: India has implemented practices for providing more job opportunities to marginalized communities mainly those living in semi-rural and rural areas as an inclusive growth strategy. One such scheme is MGNREGA which employed 83.2 million people (Mukherjee, 2024). The scheme helped in providing employment opportunities to people along with increasing income security, improving rural livelihood, and reducing migration to urban areas.
  • Education and skill development: The Indian government has also focused on investing in vocational training and education for disadvantaged groups to ensure that everyone has skills for participating in the economy. Herein, Skill India Mission was launched in 2015 under which individuals were trained to enhance their employability skills. By 2024, 51.3% of employable final-year or pre-year final-year students were trained (Ministry of Skill Development and Entrepreneurship, 2024).
  • Support to SMEs (Small and medium enterprises): As SMEs are the source of creating employment opportunities in rural areas thus, they are crucial for inclusive growth. The Indian government has initiated schemes for supporting SMEs like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) which provided collateral-free loans up to ₹5 crores to more than 67 lakh beneficiaries, or The Prime Minister Employment Generation Programme (PMEGP) until 2023 supported more than 9.29 Lakh micro-enterprise which generated employment for about 78.36 Lakh persons (Invest India, 2024).
  • Provide social safety nets and welfare programs: Many programs like the public distribution system (PDS) or MGNREGA were launched by the Indian government to provide essential support to the vulnerable population for enhancing social protection and reducing poverty.

Key concepts to assess inclusive growth

To have an effective measurement of inclusive growth and equitable development, some of the key measures are there which provide better insights about how organizations and sectors are contributing towards economic and social inclusion.

  • Job creation in rural, semi-rural, urban and metropolitan areas: The measure helps track the employment generation across different regions of the country. As one of the main aspects of inclusive growth is job creation in rural and semi-rural areas, thus for ensuring it and reducing migration of people to cities, the measurement of job creation in these areas is essential (Merotto, 2019).
  • Corporate social responsibility (CSR) expense: It defines how companies are contributing to social and environmental well-being. In India, there is a mandate for companies to spend 2% of their profits on CSR activities (Shetty & Potdar, 2023).
  • Percentage of total employment having human rights training coverage: The metric helps in assessing the companies extent to which companies are promoting human rights awareness among employees to ensure employee well-being. This training helps create a safe and respectful workplace, fostering inclusive organizational culture, and reducing harassment incidents.
  • Complaints related to sexual harassment, discrimination, child labour, forced labour, wages & other human rights issues: The complaints tracking about human rights violations help in providing insight into workplace conditions and policies effectiveness which aim to protect workers’ rights. These complaints reduction helps in achieving an equitable and inclusive work environment.

The logistics sector in the Indian economy is an important composition. As the sector has problems of poor wages, poor working conditions and informal employment, so for supporting the logistic sector, inclusive growth is required (EY, 2022). Though India is making significant efforts in the form of financial inclusion initiatives or other government schemes for inclusive growth but still the persistence of gender disparities, income inequality, and divides in rural-urban remain problems for India. To counter this and derive a more adequate contribution of the logistic sector in the inclusive growth of the country, there is a need to assess the inclusive growth status of the sector and design the strategies which will help in creating equitable economic opportunities.

References

NOTES

I am an interdisciplinary educator, researcher, and technologist with over a decade of experience in applied coding, educational design, and research mentorship in fields spanning management, marketing, behavioral science, machine learning, and natural language processing. I specialize in simplifying complex topics such as sentiment analysis, adaptive assessments and data visualizatiion. My training approach emphasizes real-world application, clear interpretation of results and the integration of data mining, processing, and modeling techniques to drive informed strategies across academic and industry domains.

I am a Senior Analyst at Project Guru, a research and analytics firm based in Gurugram since 2012. I hold a master’s degree in economics from Amity University (2019). Over 4 years, I have worked on worked on various research projects using a range of research tools like SPSS, STATA, VOSViewer, Python, EVIEWS, and NVIVO. My core strength lies in data analysis related to Economics, Accounting, and Financial Management fields.

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