Society and Culture
Inclusive Growth and the 11th Plan
Today’s Hindustan Times has an excellent editorial on the 11th five-year plan, and the economics behind the idea of ‘inclusive growth’. It is a must read for those with even a brief understanding of economics and the link, often inverse, between growth and equity.
Central planning may not be important to you or I. We will continue to receive our cellphone service, education, and health from private sources. But for millions that rely on public services it is important. And for us too, it should be because it defines how our taxes will be spent.
This article explains the policy changes the approach paper calls for. In setting a target of 9%, the 11th plan is not looking at growth simply for growth’s sake, but as a catalyst to create employment. As the article points out:
this is the first approach paper since the Mahalanobis Plan of the mid-Fifties that has focused not on augmenting growth but employment, and on making growth inclusive.
The paper deals in painstaking detail with the ways in which the poor can be made partners, instead of victims, of growth. Where it departs from its predecessors, and indeed from the approach to reconciling growth with equity outlined in the CMP of 2004, is in emphasising that this needs changes of policy and processes of governance, and not just the allocation of more money to social sector programmes.
Most important, this article explains the theoretical underpinnings of the approach paper:
Although the paper does not spell it out clearly, the above relationship between productivity in manufacturing and employment in the service industries clearly guides most of its policy prescriptions. To absorb up to 65 million more workers, the rate of growth of non-agricultural employment needs to be pushed up to 5.8 per cent. This is the reason why a high growth rate is necessary.
Further reading
- Towards Faster and More Inclusive Growth-An Approach to the 11th Five Year Plan
- Prime Minister’s Speech to the National Development Council, 9 December 2006.
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