Inclusive growth
M.M. NAMPOOTHIRY
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Welcome shift in emphasis in Plan Approach Paper, but will it mean better distribution?
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THE WORD "inclusive" has become not only fashionable but also quite relevant in our country. The Oxford Dictionary gives four meanings to the word, and the most inclusive meaning is "not excluding any section of society."
In this sense, the title of the Approach Paper on the Eleventh Five Year Plan "Towards faster and more inclusive growth" reflects the need to make growth "more inclusive" in terms of benefits flowing through more employment and income to those sections of society which have been bypassed by higher rates of economic growth witnessed in recent years.
The recognition of the need for more inclusive growth by our planners is a welcome shift in emphasis from mere increase in growth rates to improvement in standards of living of those below the poverty line through increase in employment opportunities as well as better delivery systems to ensure access to intended benefits by intended beneficiaries.
However, there is apprehension that the words "more inclusive" may not mean a real shift in emphasis from higher growth to better distribution. This appears to be the reason for the dissatisfaction expressed by some experts on the four alternative growth targets ranging from 7 per cent to 9 per cent envisaged in the Approach Paper. They prefer targets in terms of social objectives rather than percentage growth.
It is of course unfair to accuse planners of indifference or unwillingness to express targets in terms of social objectives. The Mid-Term Appraisal of the Tenth Five Year Plan (2002-2007) released by the Planning Commission last year contains nearly 100 pages in Chapter 2 titled "Human Development." Annexure 2.2.1 to this chapter is on Millennium Development Goals (MDGs) adopted by all U.N. member states, including India, at the Millennium Summit in 2000.
The last column of the Table on status of progress in the achievement of MDG target values by 2015 reveals that in almost all indicators we are off the track. The projected target value for 2015, the year by which MDG target values are to be achieved, is given separately for 12 indicators, and only for one indicator, namely, the proportion of the population below the poverty line, our performance is favourable vis-à-vis the MDG target value.
The MDG on poverty to be achieved is 50 per cent reduction in the proportion of the poor from the base year, that is, 1990 value of 37.50 per cent to 18.75 per cent by 2015. The projected proportion of the population below the poverty line in 2015 is 9 per cent, which compares very favourably with the MDG target value of 18.75 per cent.
This, however, means that despite a projected reduction of 76 per cent vis-à-vis the targeted reduction of 50 per cent in the proportion of the population below the poverty line, we lag behind in achieving the MDG target values in respect of all other indicators of socio-economic development. In fact, the gap between the projected value in 2015 and the corresponding MDG value is alarmingly wide in the mortality rate for children under 5 years, infant mortality rate and maternal mortality rate.
Mismatch
The inference from the mismatch between poverty reduction and improvement in other social indicators implies either inadequate access or even total lack of access to health care, which is not properly reflected in poverty reduction. This also implies that high overall growth rate in Gross Domestic Product (GDP) does not necessarily mean high growth in all sectors.
The overall GDP is the sum of the GDP originating in agriculture, including allied sectors, industry and services. The Table on sectoral growth rates given in the first chapter of the Mid-Term Appraisal shows that the deviation in actual growth rate from the targeted growth rate during the Tenth Plan is expected to be the maximum in agriculture and allied sectors.
While in the agriculture sector, including the allied sectors of forestry and fishing, the projected shortfall is as high as 50 per cent, the corresponding shortfalls in the industry and service sectors are much lower at about 15 per cent and 11 per cent. This is a matter of serious concern because in the ultimate analysis agriculture holds the key to the overall socio-economic development of a nation, and India is no exception.
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