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The Future of Inclusive Growth
In India, equitable growth can be achieved by following agriculture-led economic growth and preventing leakages in the economy that constrain the benefi ts of growth from reaching the low-income people.
This article was presented in the International Seminar on Inclusive Development: Issues and Challenges organised in honour of R Radhakrishna, Chairperson, Centre for Economic and Social Studies, Hyderabad from 8–10 October 2019.
The views expressed in this article are of the author and are in no way of the institutions where he works. The author is grateful to Emmanuel D’Silva for his comments.
The author would like to thank the anonymous referee and the editor of Economic & Political Weekly for their useful suggestions and observations to enhance the quality of the article substantially.
The economic growth in India has been accompanied by rising income inequalities, markedly after the reforms of 1991–92. The agriculture-led economic growth will be significantly more inclusive and reduce income inequalities, compared to that based on other strategies of growth, like focusing only on the trade liberalisation and non-agriculture sectors. Mellor (2017),1 has already discussed the issue extensively. However, this article discusses the leakages in the trickle-down effect of growth which make the growth in income far from being inclusive.
It further gives the evidence of rising income inequalities in India in the forthcoming section followed by a conceptual framework for inclusive growth. This conceptual framework is based on a three-sector model building upon the work of Mellor and Ranade (2006). The Mellor–Ranade model is developed on the Lele–Mellor model (1981) which was related to a closed economy and ignored international trade. The three sectors of interest are agriculture, industries, and non-tradable sectors. Non-tradables are defined as those goods and services that are not traded internationally. In contrast, both industry and agriculture sectors are treated as tradables. Further, strategies for increasing agricultural production and rural non-farm non-tradable sector are discussed by using the livestock sector as an example wherein the leakages in economic growth are also discussed. The last section gives the conclusion.
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