January 14, 2008
Abstract: The performance of the Indian economy along the four dimensions of inclusive growth has been discussed:
- Opportunity: The most telling indicator of failure is the large proportion of workers in agriculture, dependent on a shrinking income share (GDP share has shrunk from 40% in the 1970s to 15%, while labour force had declined from 70% to a little below 60%). Manufacturing has been unable to fill the employment gap. However, the services sector has been able to generate employment to a limited extent;
- Capability: Lack of quality, accessible and affordable educational opportunities for all is a significant However, there are positives, such as a strong private sector response to IT and ITES sectors;
- Access: The economy needs to have mechanisms that bring opportunities and capacities together. However, regulations (especially job security regulations) have cut into profitability and constrained the hiring of new workers; and
- Security: This is the weakest due to both narrow scope and coverage. However, there are promising initiatives such as the National Rural Employment Guarantee Scheme.
Keywords: inclusive growth; agriculture; IT and ITES sectors; regulations