Rapid and sustained poverty reduction requires inclusive growth that allows people to contribute to and benefit from economic growth. Analyze.
- Briefly introduce inclusive growth.
- Discuss the need of inclusive growth for poverty reduction.
- Then explain how it allows people to contribute to and benefit from economic growth.
- Conclude while giving suggestions briefly.
Model Answer :
Inclusive growth is growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity, both in monetary and non-monetary terms, fairly across society. This concept expands upon traditional economic growth models to include focus on the equity of health, human capital, environmental quality, social protection, and food security.
Need of inclusive growth for poverty reduction:
According to Oxfam’s report, ‘An economy for the 99 percent’, the gap between rich and poor is far greater than had been feared. Inequalities in incomes lead to poverty, and have multidimensional impacts on social, economic and political life. Overall levels of health are far worse in more economically unequal societies.
Rapid pace of growth is unquestionably necessary for substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors, and inclusive of the large part of the country’s labour force.
Benefits of inclusive growth:
In equal societies, people will have more job opportunities; equal income etc. This will lead to rise in purchasing power of people, better physical and mental health, rise in literacy rate, more social mobility and less violence. All these factors like high purchasing power, labor growth etc. will spur the economic growth as well. So, inclusive growth is beneficial for both people and economic growth, thus allowing both to contribute to each other.
In the short run, governments could use income distribution schemes to weaken negative impact on the poor of strategies intended to jump start growth but in long term governments need to empower people in terms of human capital. The Indian government has taken many steps in this direction like Right to education act, National health policy 2017, redistributive tax approach etc. but their effective implementation is the need of hour.
Subjects : Economy