Inclusive Growth in India

By BYJU'S Exam Prep

Updated on: September 13th, 2023

Inclusive Growth is an important topic for UPSC in Prelim as well as in Main. This topic will also help in Essay writing for UPSC.

Economic Growth and Development

Progress, growth & development are three terms which were used by some economists interchangeably to denote improvement in an economy. But a clear meaning of these terms evolved during the 1960s to 1980s era. The term ‘progress’ became a general term with no specific meaning in economics or used for denoting both growth and development. But the terms growth and development were allotted specific meaning. 


  • The term economic growth was assigned the meaning in terms of quantitative progress:
    • It is an increase in economic variables over a period of time.
    • It can be measured in absolute terms, with the quantifiability being the most important aspect of it.
    • Measuring agriculture production in a year, Per Capita Income or Growth Domestic Product of a nation for a particular year are some of its examples.
  • Since economic growth is a quantitative concept, it is easy to measure & compare.

Evolution of Meaning of Development

  • Economic growth was considered as a cause & effect for the betterment of life of people till 1950s, as it was assumed that an increase in income would automatically bring betterment in the lives of people.
  • However, it was during the 1960s & later decade when economists came to realise that economies with higher growth rate, were not necessarily having a better quality of life. Gulf countries which had a far higher level of income were performing poorly in development terms. In such a time, there arose a need to define economic development differently from economic growth.
  • Economic development was defined as quantitative as well as qualitative progress in an economy.
  • It requires conscious efforts to use higher economic growth for bringing quality change in the life of people which is higher development.
  • While economic growth is an absolute term, economic development is a relative term.
  • Qualitative nature & relativeness of economic development makes it difficult to measure.

Many economists tried to measure economic development in successive years. An important work among them done was by a Pakistani economist Mahbub ul Haq, who designed the Human Development Index to measure economic development. The first Human Development Report (HDR) was published by the United Nations Development Programme (UNDP), published in 1990.

Human Development Index

  • HDI measures development by combining three indicators, i.e. Health, Education and Standard of Living by converting them into a composite human development index, the HDI.
  • The education component of HDI is currently measured by two indicators which are- mean of years of schooling (for adults aged 25 years) & Expected years of schooling (for children of school entering age).
  • The Health component is measured as the life expectancy at birth.
  • The component of Standard of living is measured by measuring per capita Gross National Income at ‘Purchasing Power Parity’ in US Dollars.
  • Central Economic planning in India in the post-independence era was largely driven by the Planning Commission in the form of five-year plans.
  • In the initial four five-year plans, the major focus areas were agricultural growth & industrialisation. Later the planning was concerned with the removal of poverty, especially during the fourth, fifth (Twenty Point Program,1975) & 6th five-year plan (Slogan of Garibi Hatao) period along with other objectives.
  • Growth, social justice, self-reliance and modernisation remained as the guiding principles during the seventh five-year plan. The Eighth five-year plan was launched in a new era of policy reforms post balance of payment crisis of 1991. Hence the major thrust areas of these plans were centred on economic growth.
  • The focus of planning was gradually shifted towards economic development during the Ninth five-year plan with the launch of Basic Minimum Services Programme.

Gini Coefficient

  • Economic concepts such as Lorentz Curve & Gini Coefficient are important tools in measuring income inequality in an economy.          
  • The Gini Coefficient measures the level of income equality in a population which is obtained from the Lorentz curve. The value of the Gini Coefficient can vary from 0 (perfect equality) to 1 (perfect inequality).

The term development was more in focus during the Tenth & Eleventh five-year plan. A major landmark in this direction towards inclusive growth came through the Planning Commission report titled Towards faster and more inclusive growth – An approach to the 11th five-year plan – Government of India (Planning Commission) (2006).The report described the approach of the Government of India to 11th Five-year plan. Hence, the 11th Five-year plan was targeted towards inclusive growth.

Inclusive Growth

Inclusive growth is an important tool for improving the quality of life & wellbeing of all sections of society at all level. As per the OECD Inclusive growth is economic growth that is distributed fairly across society and creates opportunities for all.


  • It entails shared growth, comprehensive growth and pro-poor growth.
  • It focuses on the impartial allocation of resources.
  • This model of growth is aimed at removing the exclusion error.
  • It aims to create opportunities for all segments of population & distribute the dividend of increased prosperity, fairly across society.
  • It entails the economic development at all level, for all people, at all time.
  • Removal of inequality & the equitable distribution of income is important to focus areas of inclusive growth.
  • Inclusive growth is a holistic & comprehensive concept. It not only aims at improving economic growth but also focus on social & human growth. It includes both monetary & non-monetary parameters.
    • Some important parameters of economic growth are Employment opportunities, Gross Domestic Product, National income, Per Capita Income, Reduced poverty etc.
    • Social growth includes better education, improved health, life expectancy at birth, equity, equality, gender parity, empowerment, participation etc.
    • Human growth parameters include physical, intellectual & emotional issues.

The relationship between economic growth & inequality was also depicted by American economist Simon Kuznets. This graphical representation in Per capita income & inequality is called a Kuznets curve. The curve is used to demonstrate the hypothesis that economic growth initially leads to greater inequality, however, it is followed by the reduction of inequality.


 Millennium Development Goals

 At the international level, United Nations member states agreed to achieve the United Nations Millennium Development Goals by the year 2015. It included eight Millennium Development Goals.

 These goals were -to eradicate extreme poverty and hunger; to achieve universal primary education; to promote gender equality and empower women; to reduce child mortality; to improve maternal health; to combat HIV/AIDS, malaria, and other diseases; to ensure environmental sustainability, and to develop a global partnership for development.

Sustainable development as a vital tool for inclusive growth:

  • It aims at building an inclusive, sustainable and resilient future for people and the planet.
  • It has been beautifully defined by the Brundtland Commission in its report Our Common Future (1987). As per the report Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
  • The 2030 Agenda for the Sustainable Development was adopted by all United Nations Member States in 2015.
  • These goals follow & expand the scope of Millennium Development Goals, which expired in 2015. There are 17 Sustainable Development Goals (SDGs), which is an urgent call for action by all countries.


Twelfth Five Year plan (2012-17) of Indian Government is a leap forward in the direction of inclusive & sustainable development. It is evident from the theme of the plan, which is Faster, More Inclusive and Sustainable Growth. Along with the focus on the growth of agriculture, manufacturing sector and infrastructure, the plan also focused on poverty, health, education, environment & sustainability along with other targets.                          

  • Environmental preservation is closely linked with the concept of inclusive growth & sustainable development. The life on this earth is a delicate balance between humans & its environment.
  • Regular human interventions are causing greater harm to the environment than never. Also, the cost of environmental degradation is largely ignored and not calculated properly.
  • Here are few tools such as Environment Impact Assessment, Green GDP, Carbon tax etc. which consider, assess & penalise degradation to the environment.
  • An Environmental impact assessment (EIA) is an assessment of the possible impacts that a proposed project may have on the environment, consisting of the environmental, social and economic aspects.
  • The main purpose of the assessment is to ensure that the decision-makers consider the environmental impacts when deciding whether to proceed with a project or not. 

The concept of Green GDP

The motivation for the creation of a green GDP originates from the inherent limitations of GDP. It has as an indicator of economic performance and social progress.

Green GDP is a concept which accounts for the degradation of natural resources & environmental cost of depletion in the country’s economic growth figures. It is calculated after adjusting for environmental degradation & resources depletion from the traditional GDP figure. In other words, Green GDP equals GDP less Natural Resource Depletion Less Pollution Damage.

Environmental Kuznets Curve

It shows the relationship between economic progress on one hand and environmental degradation over a period of time caused in lieu of that economic progress.


  • It says, as the economy starts the journey of development, pollution in first phase increases but with further development of the economy, pollution rates begin to decline.
  • And eventually, both economic progress and environment maintenance go hand in hand.

Inclusive growth is a holistic approach which requires efforts not only on the part of the government and authorities but also from all the sections of society. Hence, to achieve the objective of inclusive growth, proactive participation of all the stakeholders including the state governments, local governments, international organisation, civil societies, private companies, citizens, media, peer & pressure groups is vital. This model of development will help in bringing the real change in the quality of life of all the people, especially the most marginalised & vulnerable sections. It will be the real & complete development in true sense.        

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