How Inclusive has Growth been in India during 1993/94-2009/10?: Implications for XII Plan Strategy

12 Mar 2013

By Sukhadeo Thorat and Amaresh Dubey

The report, by Sukhadeo Thorat and Amaresh Dubey, reviews the current understanding of the concept of inclusive growth, methods of its measurement, indicators for monitoring its progress, and actual progress between 1993-2010, particularly during the 11th Five-Year Plan period.

India’s Eleventh (2007-2011/12) and the Twelfth Five-Year Plans (2012/13-2017/18) have emerged as being distinct from the earlier Five-Year Plans in so far as these Plans had the goal of inclusiveness at the core of the growth strategy. The main features of the inclusive growth approach under the XI and XII Plans are the following: First, while faster growth is the main goal, the growth of GDP is not treated as an end in itself, but only as a means to an end. Therefore, it focuses on outcomes of increased income, and to realize the desired outcomes, it identifies a particular 'type of growth process’ rather than emphasizing on growth alone for inclusive outcomes. Second, the Plans recognize that the end outcome of growth is reduction in poverty and creation of employment opportunities, improving access to essential services in health, skill and education and other amenities. The third feature is the group focus, which means that pro-poorness would essentially involve outcomes that yield broad-based benefits and ensure equality of opportunity for all, especially the poor, and the poorest among them like the Scheduled Castes (SCs), Scheduled Tribes (STs), other backward castes, minorities and women (11th Plan Vol1, pp. 2).

This paper reviews the current understanding of the concept of inclusive growth, the methods of its measurement, indicators for monitoring the progress in inclusive growth, actual progress during the 1993-2010, particularly during the XI Plan and its implications for the XII Plan.

It also focuses on four interrelated issues. Firstly, it discusses the concept of inclusive growth, drawing mainly from the current literature to bring clarity on the meaning of the term. Secondly, it discusses the issues related to the indicators and measurement of inclusive growth and identifies the indicators for monitoring. Thirdly it provides empirical evidence on the inclusive character of the growth process at the all-India level, since 1993/94 to 2009/10 that includes three years of the XII Five-Year Plan (2006/07 to 2011/12) by defining inclusiveness. Finally, it indicates the implications of the findings for inclusive growth strategy under the XII Plan.

The rest of the paper is laid out as follows. Section 2 provides a review of the concept of inclusive growth and its operationalization in quantitative terms. This is followed by description of data sources and methodological issues in section 3. Section 4 has the incidence, change and rate of change of poverty across different socio-religious groups in India by place of residence followed by level, change and growth of monthly per capita expenditure of the households at the same level of disaggregation in section 5. In section 6, we report the elasticity of poverty reduction. Levels and changes in inequality and its impact on change in poverty incidence is examined in section 7. Section 8 summarizes the main findings and discusses its implications for the XII Plan strategy.

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