INCLUSIVE GROWTH

Defining Inclusive Growth

Rapid and sustained poverty reduction requires inclusive growth that allows people
to contribute to and benefit from economic growth. 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 labor force.

Inclusive growth refers both to the pace and pattern of growth, which are
considered interlinked, and therefore in need to be addressed together. The idea that
both the pace and pattern of growth are critical for achieving a high,
sustainable growth
record, as well as poverty reduction, is consistent with the findings in
the Growth Report:
Strategies for Sustained Growth and Inclusive Development

The commission notes that inclusiveness – a concept that

encompasses equity, equality of opportunity, and protection in market
and employment
transitions – is an essential ingredient of any successful growth
strategy. Here we
emphasize the idea of equality of opportunity in terms of access to
markets, resources,
and unbiased regulatory environment for businesses and individuals.

VISION
1.8. The central vision of the Eleventh Plan is to build
on our strengths to trigger a development process which
ensures broad-based improvement in the quality of life
of the people, especially the poor, SCs/STs, other backward
castes (OBCs), minorities and women. The National
Development Council (NDC), in approving the Approach
to the Eleventh Plan, endorsed a target of 9% GDP growth
for the country as a whole. This growth is to be achieved
in an environment in which the economy is much more
integrated into the global economy, an integration that
has yielded many benefits but also poses many challenges.
If this is achieved, it would mean that per capita GDP
would grow at about 7.6% per year to double in less than
ten years. However the target is not just faster growth
but also inclusive growth, that is, a growth process which
yields broad-based benefits and ensures equality of
opportunity for all.
1.9. This broad vision of the Eleventh Plan includes several
inter-related components: rapid growth that reduces
poverty and creates employment opportunities, access
to essential services in health and education especially
for the poor, equality of opportunity, empowerment
through education and skill development, employment
opportunities underpinned by the National Rural Employment
Guarantee, environmental sustainability, recognition
of women’s agency and good governance.

RAPID GROWTH AND POVERTY REDUCTION

1.10. The persistence of poverty on the scale at which it
still exists is not acceptable. A decisive reduction in poverty
and an expansion in economic opportunities for all
sections of the population should therefore be a crucial
element of the vision for the Eleventh Plan. Rapid growth
of the economy is an essential requirement to achieve this
outcome since it is an instrument for achieving a steady
increase in employment and incomes for large numbers
of our people.
1.11. Growth in the Eleventh Plan should be better
balanced to rapidly create jobs in the industrial and
services sectors. This is necessary if a significant portion
of the labour force is to shift out of agriculture, where it is
currently engaged in low productivity employment, into
a non-agricultural activity that can provide higher real
incomes per head. This must be accompanied by efforts
to improve the income-earning opportunities of those
who remain in agriculture by raising land productivity.
This process would also lead to higher farm incomes and
a rise in real wages of agricultural labour whose bargaining
power will improve as surplus labour is shifted out of
this sector.

THE EMPLOYMENT CHALLENGE

1.13. The ability to generate an adequate number of
productive employment opportunities will be a major
factor on which the inclusiveness of growth will be judged.
India is currently at a stage of ‘demographic transition’
where population growth is slowing down but the
population of young people entering the labour force
continues to expand. This means that a working person
will have fewer dependents, children or parents. The
dependency ratio (ratio of dependent to working age
population) declined from 0.8 in 1991 to 0.73 in 2001
and is expected to decline further to 0.59 by 2011. If the
workforce is gainfully employed, a lower dependency ratio
means a higher rate of savings which, in turn, can raise
the growth rate. This young demographic profile places
India favourably in terms of manpower availability and
could be a major advantage in an environment where
investment is expanding in India and the industrial world
is ageing.

SOCIAL JUSTICE AND EMPOWERMENT

1.19. The vision of inclusiveness must go beyond the
traditional objective of poverty alleviation to encompass
equality of opportunity, as well as economic and social
mobility for all sections of society, with affirmative action
for SCs, STs, OBCs, minorities and women. There must
be equality of opportunity to all with freedom and dignity,
and without social or political obstacles. This must be
accompanied by an improvement in the opportunities
for economic and social advancement. In particular,
individuals belonging to disadvantaged groups should
be provided special opportunities to develop their skills
and participate in the growth process.

ENVIRONMENTAL SUSTAINABILITY
1.21. The vision of the Eleventh Plan must also include a
clear commitment to pursue a development process which
is environmentally sustainable. Natural resources such as
water and land are limited and their per capita availability
is actually diminishing because of rising population and
also because of irrational exploitation of common pool
resources. The Eleventh Plan must be based on a strategy
that not only preserves and maintains natural resources,
but also provides equitable access to those who do not have
such access at present.

GENDER EQUITY
1.24. For the first time in the history of Indian planning
there is an attempt to move beyond empowerment and
recognize women as agents of sustained socio-economic
growth and change. The Eleventh Five Year Plan
acknowledges women’s agencies and tries to ensure that
their needs, rights and contribution are reflected in every
section of the Plan document. Gender is, therefore, a cross
cutting theme; it is not confined to a single chapter
on Women and Children. The vision is to develop an
integrated approach which would eventually dispense the
need for a separate chapter.

STRATEGY FOR THE ELEVENTH PLAN:

POLICIES FOR INCLUSIVE GROWTH
1.32. The strategy for inclusive growth in the Eleventh
Plan is not just a conventional strategy for growth to which
some elements aimed at inclusion have been added. On
the contrary, it is a strategy which aims at achieving a
particular type of growth process which will meet the
objectives of inclusiveness and sustainability. This strategy
must be based on sound macroeconomic policies which
establish the macroeconomic preconditions for rapid
growth and support key drivers of this growth. It must
also include sector-specific policies which will ensure
that the structure of growth that is generated, and the
institutional environment in which it occurs, achieves
the objective of inclusiveness in all its many dimensions.

SIZE OF THE ELEVENTH PLAN

1.154. The total public sector outlay in the Eleventh Plan
(both Centre and States and including their PSEs) is
estimated at Rs 3644718 crore. Of this total, the share of
the Centre (including the plans of PSEs) will amount to
Rs 2156571 crore, while that of the States and union
territories (UTs) will be Rs 1488147 crore.
1.155. The proposed size of the Eleventh Plan is much
larger than the projected outlay, as well as the actual
realization, in the Tenth Plan. At comparable prices, the
Eleventh Plan outlay will be 120% higher than the Tenth
Plan realization. In relation to GDP, the projected Eleventh
Plan public sector outlay will be an average of 13.54%
compared to the average of 9.46% that was achieved in
the Tenth Plan. It must be emphasized, however, that Plan
expenditure is not the same as public investment. It
includes revenue expenditure on items such as salaries,
which is high precisely because the focus of the Plan has
shifted to supporting the social sectors, especially health
and education.
1.156. Mobilizing resources in the public sector to
finance the proposed Eleventh Plan will call for a major
effort at generating tax revenues and controlling non-
Plan expenditure and also improving the resource
generation capacity of the PSEs.

THE 13 STATE-SPECIFIC TARGETS

1.152. The Eleventh Plan has been formulated in a
manner whereby 13 of the 27 monitorable national
targets have been disaggregated into appropriate targets
for individual States. These are
(i) GDP growth rate
(ii) Agricultural growth rate
(iii) New work opportunities
(iv) Poverty ratio
(v) Drop out rate in elementary schools
(vi) Literacy rate
(vii) Gender gap in literacy rate
(viii) Infant mortality rate (IMR)
(ix) Maternal mortality ratio (MMR)
(x) Total Fertility Rate (TFR)
(xi) Child malnutrition
(xii) Anaemia among women and girls
(xiii) Sex-ratio
1.153. Appropriate policies and programmes have to be
identified both at the Central and State levels so as to ensure
realization of these targets in the Eleventh Plan period.

THE 27 NATIONAL TARGETS

1.151. Twenty-seven targets at the national level fall
in six major categories. The six categories are:
(i) Income and Poverty; (ii) Education; (iii) Health;
(iv) Women and Children; (v) Infrastructure; and
(vi) Environment. The targets in each of these categories
are given below.
(i) Income and Poverty
• Average GDP growth rate of 9% per year in the
Eleventh Plan period.
• Agricultural GDP growth rate at 4% per year on the
average.
• Generation of 58 million new work opportunities.
• Reduction of unemployment among the educated to
less than 5%.
• 20% rise in the real wage rate of unskilled workers.
• Reduction in the head-count ratio of consumption
poverty by 10 percentage points.
(ii) Education
• Reduction in the dropout rates of children at the
elementary level from 52.2% in 2003–04 to 20% by
2011–12.
• Developing minimum standards of educational
attainment in elementary schools, to ensure quality
education.
• Increasing the literacy rate for persons of age 7 years
or more to 85% by 2011–12.
• Reducing the gender gap in literacy to 10 percentage
points by 2011–12.
• Increasing the percentage of each cohort going to
higher education from the present 10% to 15% by
2011–12.
(iii) Health
• Infant mortality rate (IMR) to be reduced to 28 and
maternal mortality ratio (MMR) to 1 per 1000 live
births by the end of the Eleventh Plan.
• Total Fertility Rate to be reduced to 2.1 by the end of
the Eleventh Plan.
• Clean drinking water to be available for all by 2009,
ensuring that there are no slip-backs by the end of the
Eleventh Plan.
• Malnutrition among children of age group 0–3 to be
reduced to half its present level by the end of the
Eleventh Plan.
• Anaemia among women and girls to be reduced to
half its present level by the end of the Eleventh Plan.

(iv) Women and Children

• Sex ratio for age group 0–6 to be raised to 935 by 2011–
12 and to 950 by 2016–17.
• Ensuring that at least 33% of the direct and indirect
beneficiaries of all government schemes are women and
girl children.
• Ensuring that all children enjoy a safe childhood,
without any compulsion to work.
(v) Infrastructure
• To ensure electricity connection to all villages and BPL
households by 2009 and reliable power by the end of
the Plan.
• To ensure all-weather road connection to all habitations
with population 1000 and above (500 and above in
hilly and tribal areas) by 2009, and all significant
habitations by 2015.
• To connect every village by telephone and provide
broadband connectivity to all villages by 2012.
• To provide homestead sites to all by 2012 and step up
the pace of house construction for rural poor to cover
all the poor by 2016–17.
(vi) Environment
• To increase forest and tree cover by 5 percentage points.
• To attain WHO standards of air quality in all major
cities by 2011–12.
• To treat all urban waste water by 2011–12 to clean
river waters.
• To increase energy efficiency by 20% by 2016–17.