Inclusive Growth in India

1. Introduction

Inclusive Growth in India means economic growth that creates employment opportunities and helps in reducing poverty. Inclusive Growth in India focuses on ensuring that the benefits of economic growth reach all sections of society, particularly the poor, vulnerable and marginalized groups.

It means having access to essential services in health and education by the poor. Inclusive Growth in India includes providing equality of opportunity, empowering people through education and skill development. It also encompasses a growth process that is environment friendly growth, aims for good governance and helps in creation of a gender sensitive society. As per OECD (Organisation for Economic Co-operation and Development), Inclusive Growth is economic growth that is distributed fairly across society and creates opportunities for all.

2. Elements of Inclusive Growth

Skill Development

• Harnessing the demographic dividend will depend upon the employability of the working age population, their health, education, vocational training and skills. Skill development plays a key role here and is an important component of Inclusive Growth in India.
• India is facing a dual challenge in skill development. First, there is a paucity of highly trained workforce and second, there is non-employment of conventionally trained youths.
• UNICEF 2019 reports stats that at least 47% of Indian youth are not on track to have the education and skills necessary for employment in 2030.

Financial Inclusion

• Financial Inclusion in India is the process of ensuring access to financial services to vulnerable groups at affordable costs.
• Financial Inclusion in India is necessary for Inclusive Growth as it leads to the culture of saving, which initiates a virtuous cycle of economic development.

Technological Advancement

• The world is moving towards an era of Industrial Revolution 4.0. These technological advancements have capabilities to both decrease or increase the inequality depending on the way these are being used. Technology therefore plays an important role in Inclusive Growth in India.
• Several initiatives have been taken by the government, eg. Digital India Mission, so that a digitally literate population can leverage technology for endless possibilities.
• Technology can help to combat other challenges too, eg:
  • Agriculture- Modern technology can help in making an agro-value chain from farmer to consumer more efficient and competitive.
  • Manufacturing- Technology can resolve the problems of finance, procuring raw materials, land, and linkages with the user market. GST was made possible only with the help of sound technology.
  • Education- Innovative digital technologies can create new forms of adaptive and peer learning, increasing access to trainers and mentors, providing useful data in real-time.
  • Health- Technologies could transform the delivery of public health services – extend care through remote health services.
  • Governance- Technology can cut down delays, corruption, and inefficiency in the delivery of a public service.

Inclusive Development in India increasingly depends on using technology to expand access to essential services and opportunities across different sections of society.

Economic Growth

• India is among the fastest-growing major economies in the world. However, currently Indian economy is facing slowdown due to both cyclic and structural challenges.
• However, the target of becoming a $ 5 trillion economy by 2024-25 can allow Inclusive Growth in India to reduce inequality, increase social expenditure and provide employment to all.

Social Development

• It means the empowerment of all marginalised sections of the population like SC/ST/OBC/Minorities, women and transgenders.
• Empowerment can be done by improving institutions of the social structure i.e. hospitals especially primary care in the rural areas, schools, universities, etc.
• Investment in social structures will not only boost growth (by fiscal stimulus) but will also create a healthy and capable generation to handle future work.

Inclusive Development in India requires sustained investment in social infrastructure, human capabilities and equal opportunities for marginalized sections.

3. Challenges in Achieving Inclusive Growth

Poverty

• As per the Multidimensional Poverty Index (MPI) 2018, India lifted 271 million people between 2005-06 and 2015-16, with the poorest regions, groups, and children, reducing poverty fastest. India demonstrates the clearest pro-poor pattern at the sub-national level.
• Still, despite the massive gains, 373 million Indians continue to experience acute deprivations. Additionally, 8.8% of the population lives in severe multidimensional poverty and 19.3% of the population are vulnerable to multidimensional poverty.

Poverty therefore remains one of the major Challenges of Inclusive Growth and a key obstacle to achieving Inclusive Growth in India.

Unemployment

• As per the Periodic Labour Force Survey (PLFS) of NSSO, the unemployment rate among the urban workforce was 7.8%, while the unemployment rate for the rural workforce was 5.3% totalling the total unemployment rate at 6.1%.
• The quality and quantity of employment in India are low due to illiteracy and due to over-dependence on agriculture.
• The quality of employment is a problem as more than 80% of people work in the informal sector without any social security.
• Low job growth is due to the many factors such as, low investment, low capital utilization in industry and low agriculture growth.

Unemployment remains one of the major Challenges of Inclusive Growth, as employment is essential for ensuring that the benefits of Inclusive Growth in India reach a wider section of the population.

Agriculture Backwardness

• Around 44% of people in India have agriculture-related employment but its contribution to the Indian GDP is only 16.5% which lead to widespread poverty.
• Issues in agriculture are such as: declining per capita land availability, a slow reduction in the share of employment, low labour productivity, decline in agriculture yield due to climate change, land degradation and unavailability of water and disparities in growth across regions and crops.

Agricultural backwardness is one of the major Challenges of Inclusive Growth, particularly because a large share of India’s population remains dependent on agriculture. Addressing these issues is essential for Inclusive Growth in India and Inclusive Development in India.

Issues with Social Development

• Social development is one of the key concerns for Inclusive Growth in India. But it is facing some problems such as:
• Significant regional, social and gender disparities
• Low level and slow growth in public expenditure particularly in health and education
• The poor-quality delivery system
• Social indicators are much lower for OBC, SC, ST, and Muslims
• Malnutrition among the children – India ranks 102nd in Global Hunger Index

These issues represent important Challenges of Inclusive Growth, as unequal access to health, education and other basic services prevents the benefits of growth from reaching all sections of society.

Regional Disparities

• Regional disparities are a major concern for Inclusive Growth in India. Factors like the caste system, gap between rich and poor etc. contribute to the regional disparities which create a system where some specific groups hold more privileges over others.
• Some of the regional disparities problems are as follow:
  • In terms of literacy rate, Kerala is the most literate state with 93.1% literacy, on the other hand, literacy rate of Bihar is only 63.82%.
  • As per recent estimates (2024–25), Goa has a per capita income of around ₹5.5–6 lakh, while Bihar has around ₹60,000–₹65,000. This means Bihar’s per capita income is roughly 1/8th to 1/9th of Goa’s.

Reducing such regional disparities is essential for Inclusive Development in India and remains one of the important Challenges of Inclusive Growth.

4. Measuring Inclusive Growth

Inclusive Development Index (IDI)

• In the Inclusive Development Index (IDI) compiled by the World Economic Forum (WEF), India ranked 62nd out of 74 emerging countries and was among the least inclusive countries in Group of 20 (G-20) countries.
• The IDI is based on the idea that most people base their country’s growth not on GDP but by their own standard of living.
• It gives a measure of inequality based on three parameters:
  • Growth and development
  • Inclusion
  • Inter-generational equity and sustainability.
  • India also did not make it to the top 10 most inclusive emerging and developing economies, where its neighbours Nepal, China and Sri Lanka made a mark.
  • India performed its best in terms of “intergenerational equity and sustainability”, ranking 44th, for which credit can be attributed to its demographic dividend.

The Inclusive Development Index (IDI) provides a broader perspective on Inclusive Growth in India by looking beyond GDP and considering growth, inclusion and sustainability.

Social Progress Index (SPI)

It is an aggregate index of social and environmental indicators which includes the following:

• Basic human need
• Foundation of well being
• Opportunity

The Social Progress Index helps assess dimensions of Inclusive Growth that are not captured by conventional economic indicators.

5. Measures to Achieve Inclusive Growth in India

• Inclusive Growth in India means economic progress that benefits all sections of society, especially the poor, women, and marginalized groups. In India, despite high growth rates, inequality, unemployment, and regional disparities remain key challenges. Therefore, Inclusive Growth in India Measures focus on ensuring equal access to opportunities such as employment, education, healthcare, and financial services.
• Employment and livelihood generation: The government promotes employment through schemes like MGNREGA, which guarantees 100 days of wage employment in rural areas, and PMEGP, which supports micro-enterprises. Similarly, Pradhan Mantri Mudra Yojana provides collateral-free loans to small businesses, while DDU-GKY and DAY-NULM focus on skill development and self-employment for rural and urban poor.
• Financial inclusion and social security: Financial Inclusion in India is strengthened through Pradhan Mantri Jan Dhan Yojana, which has enabled millions to access banking and direct benefit transfers. In healthcare, Ayushman Bharat provides insurance coverage to vulnerable families, while National Rural Health Mission improves rural healthcare infrastructure.
• Human development and infrastructure: Education and sanitation are addressed through Sarva Shiksha Abhiyan and Swachh Bharat Mission, improving literacy and public health. Infrastructure initiatives like Bharat Nirman enhance rural connectivity and basic services, which are essential for reducing poverty.
• Policy and institutional support: Policy frameworks led by NITI Aayog emphasize technology-driven, sustainable, and inclusive development. Global insights from World Economic Forum highlight investment in human capital, better labour systems, and focus on labour-intensive sectors as key to inclusion.
• Inclusive Growth in India requires a multi-dimensional approach combining welfare schemes, economic reforms, and institutional support. Sustained focus on employment, human development, and equitable access will ensure that growth becomes both inclusive and sustainable.

6. Conclusion

Indian government along with the state governments and local governments should continue to focus on eradicating poverty and achieving sustainable development to improve the lives of India’s people. Inclusive Growth in India requires coordinated efforts at all levels of government to ensure that the benefits of economic growth reach every section of society.

Through innovative partnerships with an international organization, civil societies, and private companies, inclusive and equitable growth can be targeted.

Inclusive Growth in India will help in the empowerment of vulnerable and marginalized populations, improve livelihoods, and augment skill-building for women. Such Inclusive Development in India can ensure that economic progress is accompanied by greater social and regional equity.

BPSC Mains Practice Question

“Inclusive Growth in India is essential for reducing poverty, unemployment and regional disparities.” Discuss the major challenges to achieving inclusive growth in India and examine the measures taken by the government to address them.

Learn more of Inclusive growth in India

For additional reading on Inclusive Growth in India, refer to the official NITI Aayog page on inclusive and sustainable economic growth: NITI Aayog – SDG Goal 8: Inclusive and Sustainable Economic Growth.