India’s government has made “inclusive growth” a key element of their policy platform, stating as a goal: “Achieving a growth process in which people in different walks in life… feel that they too benefit significantly from the process.” (Ahluwalia, 2007)

3. Credit seminar
Inclusive Growth in India: Challenges and
Prospects
Presented by
Jagriti Rohit
Roll no: 10242

4. High GDP but EXCLUSION in
terms of low agricultural
growth rate, low-quality
employment, poor education,
Inadequate healthcare
services, rural-urban divide,
social inequalities, and
regional disparities.
Future GDP growth
Currently a $ 1.73 trillion
economy with a population of
1.2 billion.
To sustain the economy to
double digit figure, inclusion of
all section of society is required.
(word bank 2012)

5. • India’s government has made “inclusive growth” a key
element of their policy platform, stating as a goal: “Achieving
a growth process in which people in different walks in life…
feel that they too benefit significantly from the process.”
(Ahluwalia, 2007)

6. Inclusive growth
• The AfDB defines Inclusive Growth (IG) as economic growth
that results in a wider access to sustainable socio-economic
opportunities for a broader number of people, regions or
countries, while protecting the vulnerable, all being done in an
environment of fairness, equal justice, and political plurality.

8. Social Sector
Development
Poverty Reduction
and increase in
quantity and quality
of employment
Agricultural
Development
Reduction in
regional disparities
Protecting the
environment
Elements of Inclusive Growth

9. Year Rural Urban Total In million
1993 – 94 50.1 31.8 45.3 403.7
2004 – 05 41.8 25.7 37.2 407.1
2009 – 10 33.8 20.9 29.8 368.9
2011 – 12 25.7 13.7 21.9 269.3
Poverty
• Poverty levels are high in few states like Bihar, Odisha,
Madhya Pradesh, Uttar Pradesh.
• 80% poor are in rural areas.
Source: Press Note on Poverty Estimates, 2011
– 12, Planning Commission; Report of the
Expert Group to Review the Methodology for
Estimation of Poverty (2009) Planning
Commission

10. causes
Social
Educational
Infrastructural
Employment
Agriculture
Rural wages
Rural non farm
employment
Effect
Hunger
Malnutrition
High mortality
Education and
social advancement
Health risk
Urban migration
and urban poverty

11. Employment

12. Problems in employment
• 423 million peoples in unorganised sector accounts for
92% of the total employment
• Growth of employment: unorganised sector
• Quality of employment : do not have any social security

13. Agriculture growth
Deceleration in growth
from 3.5% during 1981-97
to 2% during 1997-2005.
Decline in yield growth
Disparities
Widening economic
disparities between
irrigated and non irrigated
areas
Land and water
use
Increase in non agri
demand due to higher
GDPand urbanization
Institution
To help small farmers in
increasing their
productivity and
marketing
Technology
Uneven and slow
development
Inefficient use of
available technology
Commodity prices
Vulnerability to world
commodity and price
volatility due to trade
liberalization

14. DEFICIT IN
AGRICULTURE
land and
water
management
deficit
investment,
credit and
Infrastructure
deficit,
research and
extension
(technology)
deficit,
market
deficit,
education/
skill deficit
institutions
deficit,

15. Rural non farm sector
Micro and small enterprises
• Weavers, artisans, hawkers, people engaged in food processing
• Issue: unorganized and competition
Annually, India produces 205 million tonne
fruit and vegetables, and is the second-largest
country in the world as far as farm production
is concerned.
However, it processes just 4.6 per cent of its
output. In contrast, countries like the United
States (65 per cent), China (23 per cent) and
Philippines (78 per cent) are far ahead of India
in reducing wastage and enhancing the value
addition and shelf-life of the farm products.

16. Infant mortality in India is 50 per 1,000 births in 2009,
compared to 41 in Bangladesh and 31 in Nepal. Similarly,
if we talk about the under-five mortality rate, it was 69
per 1,000 births in 2009 in India versus 48 in Nepal and 52
in Bangladesh, according to Unctad's Least Developed
Countries Report 2011 and Human Development Report
Looking at Planning Commission data,
public health expenditure did not even
touch 1.4 per cent of the GDP in the 11th
five-year plan.
The proportion Of children that dropped out of
elementary school by Class VIII in 2007-08 was
43%.
Social sector development

17. Six problems in Social Sector:
education and health
• There have been significant achievements but there
are problems
• Low levels of social indicators
• Slow progress
• Significant regional, social and gender disparities
• Low level and slow growth in public expenditures
particularly on health
• Poor quality delivery systems

18. • Post reform period income inequality increased and its
worsening
• Benefit of economic development concentrated in
developed areas significant regional disparities in India.
• Per capita income : Highest per capita income
Rs.16,679 in Punjab; lowest per capita income state
Rs.3557 in Bihar
• Female infant mortality varies from 12 in Kerala to 88
in Madhya Pradesh
• Female literacy varies from 33.6% in Bihar to 88% in
Kerala ECONOMIC SURVEY 2010-11

19. • In general, richer states
grew faster than the
poorer states.
• Causes for disparities;
Investment in
physical and
human capital
Technology
Institutions
including
governance

20. Environment
Degradation of land, water.
Increase in pollution levels
Challenges of climate change
Higher economic growth should
not lead to decline in our
environment
Change in Consumption patterns

21. India’s stand
11th and 12th five
year plan focus is
on inclusive growth
To achieve inclusiveness in all the
dimensions requires multiple
interventions, and success depends
not only on introducing new
policies and government
programmes, but on institutional
and attitudinal changes brought
about, which take time.

22. Strategies for inclusive growth
• Two strategies are used for inclusive growth
Social inclusion
Financial inclusion

23. Strategies

24. Social inclusion
Social Inclusive Programmes are initiatives of the government to provide
access to marginalised sections to basic education and health facilities,
better sanitation, better roads and other infrastructural facilities.
Expenditure on health and education is very essential for the overall
development of the nation.
Developed nations are spending more than 10 percentage of their GDP on
Health and education facilities..
But still ‘emerging economy’ like India is spending 3-4% on public health
and about 6 % of its GDP on education which is quite meagre

25. • In order to ensure inclusive growth government should
enhance its spending on education and health.
• Education improves the skills and abilities of human being,
whereas health is very essential for an active and productive
life.
• Education and health are very essential to convert a human
being into a human capital.
• Studies have also proved that health facilities would enhance
life expectancy which would automatically enhance GDP
figures.
• That is the reason why we are giving more importance to
these social over head capital
Planning commission 12th
plan document

26. Need for social inclusion
• The trickledown effect of economic growth to the poorer sections of the
society did not successfully lead to poverty eradication
• Poverty persists mainly due to the inability of some groups of people to
participate in the process of economic growth
• Philip and Rayhan (2004): the poor are more
vulnerable than any other group
• Social inclusion deals with both absolute
deprivation and risk and vulnerabilities
• It deals not only with social risks (sickness, old
age, unemployment and social exclusion) but
also with programs that secure income such as
food security, employment, education, etc.,
ensuring social and economic security

27. Governmental efforts
• Various programmes by
government of India
• MNAREGA
• INDIRA AWAS YOJANA
• PRADHAN MANTRI GRAM
SADAK YOJANA
• NRHM
• ICDS
• MID DAY MEAL
• SARVA SHIKSHA ABHIYAN

28. • JNNURM
• ACCLERATED IRRIGATION BENEFIT PROGRAM
• RAJIV GANDHI GRAMIN VIDYUTIKARAN YOJANA
• RAJIV GANDHI DRINKING WATER MISSION
• RASHTRIYA KRISHI VIKAS YOJANA
12th five year plan
document

29. • Financial Inclusion as the “process of ensuring access to
appropriate financial products and services needed by all sections
of the society in general and vulnerable groups such as weaker
sections and low income groups in particular, at an affordable
cost in a fair and transparent manner by regulated, mainstream
institutional players”.
Financial inclusion

30. General
• Census 2011 estimated that out of 24.67 crore households in the country,
14.48 crore (58.7%) households had access to banking services.
• Of the 16.78 crore rural households, 9.14 crore (54.46%) were availing
banking services.
Farmers
• Only 27% farmers borrows from formal source of credit
(rangarajan report 2012)
Region
wise
• Exclusion is more widespread in north eastern region
Social group
• Only 36% of the disadvantaged group are indebted to formal
source of credit

31. The efforts to include the financially excluded
segments of the society into formal financial
system in India are not new.
The concept was first mooted by the Reserve
Bank of India in 2005 and Branchless Banking
through Banking Agents called Bank Mitr
(Business Correspondent) was started in the
year 2006.
In the year 2011, the Government of India
gave a serious push to the programme by
undertaking the " S w a b h i m a a n
"campaign to cover over 74,000 villages, with
population more than 2,000 (as per 2001
census), with banking facilities.

32. Measures for Financial Inclusion in
India
• Introduction of ‘No-Frills’ account
• Relaxing ‘Know Your Customer’ (KYC) norms
• General Purpose Credit Card (GCC) Schemes
• Role NGOs, SHGs and MFIs
• Business Facilitator (BF) and Business Correspondent
(BC) Models.
• Nationwide Electronic Financial Inclusion System
(NEFIS)
• Project Financial Literacy
• Financial Literacy and Credit Counseling (FLCC) centres
• Financial Inclusion Fund (FIF)

33. PRADHAN MANTRI JAN
DHAN YOJANA

34. Six pillars
Universal access to banking facilities:
Providing Basic Banking Accounts with overdraft
facility and RuPay Debit card
Financial Literacy Programme:
Creation of Credit Guarantee Fund:
M i c r o - I n s u r a n c e :
Unorganized sector Pension schemes like
Swavalamban:

35. Role of Technology in Financial
Inclusion
Electronically Know Your Customer(e-KYC)
Transaction through Mobile Banking:
Immediate Payment System (IMPS):
Micro-ATMs:
National Unified USSD Platform(NUUP):
Aadhaar Enabled Payment System (AEPS) and Aadhaar Payments
Bridge System(APBS):
RuPay Debit cards:

36. CURRENT STATUS
• On an average 1,15,000 bank accounts are being opened
every day. As on 22.10.2014, a total number of 6.47 crore
accounts have been opened with a deposit of Rs. 4813.59
crore.

37. Scope of inclusive growth
Geographies
Business
Individual
• More focus on
development of socially
and economically
backward area
• Development of micro
finances, self help group
and rural business
• Socially and
economically backward
groups and individual

38. Review
• Has Growth Been Socially Inclusive during 1993-94 – 2009-
10? Sukhadeo Thorat, Amaresh Dubey (2012) Economic and
Political Weekly.
• This paper examines the changes in poverty incidence and
monthly per capita expenditure in India using the National
Sample Survey’s unit record data of three rounds, 1993-94,
2004-05 and 2009-10.
• The results indicate that the poverty rate has declined at an
accelerated rate during 2004-05 – 2009-10 for all socio-
religious household groups.
• However, some groups benefited more than the others from
poverty reduction. Inequality has also begun to adversely
affect poverty reduction, particularly in the urban sector.

39. • Regional Inequality and ‘Inclusive Growth’ in India under
Globalization: Identification of Lagging States for Strategic
Intervention Amitabh Kundu K. Varghese (2010)
• The strategy of inclusive growth and balanced regional
development launched since 2003-04, has led to acceleration
in the average growth in the less developed states, including
those in the North-East.
• Poverty reduction has been relatively less in less developed
compared to developed states, resulting in concentration of
poverty in a few backward states.
• The correlation of economic development with amenities,
although statistically significant, is relatively low, which
suggests that the problems pertaining to health, education,
and access to other amenities cannot be effectively addressed
just by focusing on economic development

40. Bank Strategies for Financial Inclusion
Rajasthan (Yogesh Suri, 2008, State Bank of Bikaner and
Jaipur )
• In August 2006, as lead bank in Rajsamand District, SBBJ was entrusted
the task of achieving 100% financial inclusion in the district.
• 59 branches of the Bank took up the task of surveying 10004 villages
and 21 semi-urban centres. About 2 lakh families were identified in the
survey.
• Objective was to have minimum one account per household as per the
voter list.
• Rajsamand emerged as one of the first districts where 100% financial
inclusion was completed.
• The Bank holds number one position in credit linking Self Help Groups
in the during 2004-05 to 2007-08.

41. Extension has always participated in rural development so its role in social
inclusion is evident
Capacity building of extension personnel to
equip them with know how of financial
inclusion.
Catering to the need of financial literacy of
the rural people.
Extension can help rural people to get the latest information of various
government schemes and benefits
Roleofextension

42. Extension personnel can provide help for
organising farmers organisation and self help
groups
FOs should develop membership profiles
to help take membership diversity into
account and measure how far the
organisation is representative of the
community.
Social inclusion can be enhanced by low
thresholds for entry of new members,
active policies to include all types of rural
households, and a concentration on more
socially mixed groups.

43. Lesson from China
India leap frogged from agriculture to services
with less focus on manufacturing.
The share of employment in manufacturing
in Malaysia is 50%, in Korea 62%, in China
31%. On the other hand, the share of
employment in manufacturing in India is only
12%
Diversification towards rural non-form
sector in China is one of the important
factors responsible for rural poverty
reduction (poverty 3%).
This was partly due to high agricultural
productivity and investment in physical
and human capital.

44. WAY FORWARD

45. Conclusion

46. CONCLUSION
• There is a need to have a broad based and inclusive
growth to benefit all sections of society and improve
economic growth.
• Issues and challenges in five elements of inclusive growth
(poverty and employment, agriculture, social sector,
regional disparities and environment). Tackling theses
dimension will lead us to prosperity.