Issues and Challenges of Inclusive Development

India has had a fairly decent growth experience in the last two decades and the people have seen a level of prosperity not experienced in the earlier two centuries. The prosperity, though, is still very unevenly distributed, it has, nonetheless, induced a very invigorating outlook for the future among all the people.

In the context of the broader theme envisaged for this paper, it is necessary to note at the outset that the economic reform measures being undertaken in India now for nearly 30 years can be traced to the doctrine of Washington Consensus formulated by Williamson (Latin American adjustment: How much has happened? Institute for International Economics, Washington, 1990) which contained ten key reforms including fiscal discipline comprising reordering of public expenditure priorities, tax reforms and privatisation, deregulation, liberal inward foreign investment, a competitive exchange rate and others, generally trying to promote a market economy and free trade.

This paper urges the need for shifting from current inclusive growth strategy to sustainable development strategy in India. There are challenges as well as opportunities in making this shift. The challenges are developing the appropriate database required for integrating and balancing the three pillars—economic, social and environmental—of sustainable development and building the institutional capacity for policy reforms. The opportunities are creation of an enabling institutional and policy environment for the successful implementation of sustainable development.

Inclusive growth is a multi-dimensional concept which includes poverty reduction, equity among different groups and regions, and also the open society concept for the technology and institutions. Using examples from agriculture, the paper shows that the instruments for the future of inclusive development are missing in India. Even if agriculture growth will take place at an accelerated rate, the leakages in the linkage of agriculture with non-tradable sector will pose a binding constraint on poverty alleviation and inclusive development.

The paper draws heavily on my own personal experience in helping Asian countries stabilize their rice prices and contains more autobiographical material than is standard in order for the reader to understand the background. The experience is mainly based in Indonesia, which managed to stabilize rice prices for a quarter of a century, from 1973 to 1998, although I have followed closely the price stabilization activities of China, Vietnam, and the Philippines as well. The essay deals with both the “how” of stabilizing rice prices and the “why.” They are connected, and that is part of the story. There is also a theoretical part to the story, which is discussed briefly.

Food security is a common challenge among South Asian countries, and it leads to major effects on health outcomes. Two of the Sustainable Development Goals focus on eliminating hunger, promoting good health and enhancing well-being. Hunger and malnutrition are also linked to poverty, since low income limits access to nutritious food, basic health care and proper sanitation. Hunger and malnutrition have long-term impacts on communities, such as stunting in children. Other impacts include infant deaths, low immunity and poor cognitive development. The consequences of hunger and malnutrition are severe and have negative effects in overall development of a country. Even though this has been well understood, developing countries face issues in creating effective policies. To understand the drives of policy change, this paper uses case study approach and applied the Kaleidoscope model to trace the policy process of food security in India. We studied the National Food Security Act of 2013, India, in detail and tested the 16 hypotheses of the kaleidoscope model to understand the policy process. Results indicate that the National Food Security Act was influenced due to political motivations such as central government elections.

This paper examines India’s record in industrial reform. Instead of big bang reform, the country followed a strategy of reforming clusters of interrelated industries in a simultaneous manner. The eighties saw the highest growth rates. Recent growth performance has been poor. The Niti Aayog has suggested a vent for surplus model and critiqued the relative success of the small industry. But China which it has given as the model has not been able to compete with India in industries like gems and jewelries. The Gitanjali fraudsters need to be punished but the sector’s success reinforced: as also of similar possibilities.

Industrialization is essential for bringing about structural changes in an economy. Industrial policy is a process whereby governments intervene in the economy selectively to bring about the industrialization. Most major economic powers pursued industrial policy before and several years after the Second World War. This helped in the economic reconstruction of Europe and the modernization of the economies of East and South East Asian countries. The attitude towards industrial policy changed drastically after the onset of liberalization and globalization from the early 1980s. For several years thereafter, development was very much left to market forces. After frequent instances of market failures culminating in the global economic crisis of 2008–09, there has been a revival of industrial policy. Since the mid-2000s, industrial policy has been revived in most major economies. Ever since its independence, India has followed industrial policy in one form or the other. Such policies were adopted in 1948, 1956, 1991 and 2011. The present government circulated in 2017 a draft industrial policy which is under discussion. In the context of the current socio-economic scenario in the country, a new industrial policy should concentrate on galvanizing agriculture, reviving demand through stress on the production of goods and services for mass consumption, prioritizing employment generating industries, creating industrial infrastructure and through massive state intervention for the restructuring of the health and education sectors. It will also be necessary to delink selectively from the world economy and creatively use the limited space available for pursuing industrial policy, in the framework of the WTO rules.

This article deals first with the inequality in healthcare provision between advanced capitalist countries and developing countries and their outcomes in lower longevity and higher IMRs in the latter. It also argues that within the advanced countries, those with a lower degree of inequality between different population groups and a more robust public healthcare system perform better in terms of healthcare systems. It then goes on to concentrate on the situation in India. It points out that neoliberal reforms, including the increasing privatization of health care has made access to health care much more difficult for the poorest and the marginalized sections of the population. It then goes to argue that the Adivasis, except in Northeast India, form the most disadvantaged group in socio-economic terms. They are the least educated, have the worst access to health care and a large section of them have lost their land access to forest products because of the incursion of mining enterprises into their usual habitats. The result has been that not only are their health outcomes much worse than that of the general population, in some cases they have even deteriorated over time.

This paper empirically examines the impact of globalization on the health status of the African countries by using panel data. Unlike previous studies, we have attempted to use three different dimensions of globalization and estimate their impact on health status. We also introduced an initial level of human development and income status as control variables and found them playing an important role. The fixed effects panel data analysis shows that globalization has a positive impact on the health status measured by infant mortality rate and life expectancy. Out of economic, social and political dimensions of the globalization, the first one has the highest influence on the health. Moreover, the pace of health improvement is faster or the same in low human development and low-income countries compared to that in medium human development and middle-income countries.

This chapter is about an alternative approach to measure poverty, focusing on the basic methodological challenges in poverty measurement rather than dealing with the often debated data-related issues. In 1857, Engel studied the consumption and production pattern in the Kingdom of Saxony, employing an unorthodox scientific procedure at a time when neither statistical regression nor established economic theory existed. His methods resembled in many ways the present-day econometric modeling with nonparametric regression. He used this approach to study the living conditions of the poor in terms of the consumption of essential commodities using most of their income. Unaware of his work, Sitaramam, Paranjpe, Kumar, Gore, and Sastry (SPKGS), and Kumar, Gore, and Sitaramam (KGS) used a similar method to study the consumption pattern, focusing exclusively on the main food item in India (cereals), and used it to estimate consumption deprivation—the shortfall of actual consumption of cereals from the community’s perceived maximum desired level. The connecting thread between Engel’s and the KGS studies was the Engel curve for the necessity. They described it as “a poverty index without a poverty line.” The outline of this new paradigm was developed in two articles, over a span of 13 years. Unfortunately, this unconventional approach, that of a notional poverty without a benchmark poverty line, initially faced massive intellectual roadblocks. This initial “equilibrium” KGS model later served as the launching pad of the “dynamic” Chattopadhyay-Krishna Kumar-Mallick (CKM) model that analyzed poverty through a stochastic dynamic agent-based market exchange model for assets and commodities with the KGS consumption pattern embedded therein as a description of “common knowledge” about community’s consumption pattern. Based on a tacit notion of poverty pertaining to a low-income category of the population who spend all of their income and are left with no savings (an Engel-like notion of poverty), they estimated the time profile of income and cereal consumption distributions and cereal consumption deprivation of that population. This approach is reminiscent of Engel’s data-based approach and led to the first inclusive poverty index (viz. poverty without any exogenous poverty line). This article traces the evolution of this CKM method, starting from the Engel–KGS origin, and explains the shortcomings of existing econometric approaches.

This essay subjects to criticism the dominant convention in the inequality- and poverty-measurement literature of employing wholly ‘relative’ indices and advocates, instead, the routine use of ‘centrist’ measures. In the process, the paper revisits some old debates on the logical adequacy and normative appeal of measures of inequality and poverty that are either wholly relative or wholly absolute. The implication of these issues for the diagnosis of magnitudes and trends in inequality and poverty is illustrated by means of a couple of simple empirical examples drawn from Indian data.

‘Poor’ and ‘backward’ are widely used terms in the public policy discourse in India. From the perspective of defining the unit of action for public policy, these terms have been used largely with respect to three levels, viz. household; group or community; and at a spatial or regional level. However, there have been various aspects involved in identifying the ‘poor’ and ‘backward’ in India for the purpose of targeted public policies. These have particularly come into focus since the past decade or so, in the context of the public policy discourse on ‘inclusion’ and the reports of various committees and commissions in India relating to poverty, social disadvantaged groups and regional disparities. The purpose of this article is to provide an overview of these aspects, so as to lead to an integrated perspective and indicate some of the policy challenges and policy research issues involved.

Drawing on the definition of ‘inclusive growth’ of providing equitable opportunities for economic participants during economic growth, an important question that is investigated in this study is how inclusive is the export of modern services of computer and information services, and miscellaneous professional services in the international trade arena. Applying the yardstick of gauging the gap between potential and actual performances, the strength of ‘inclusive growth’ is measured. Using a meta-frontier framework, this paper compares the modern services export potential and meta-technology ratios for the selected high performing emerging economies of South and East Asia with the developed world. The results show that there are significant differences in the meta-technology ratios of the emerging countries in modern services compared to developed countries. Alarmingly, there is substantial unrealized export potential for high performing developing countries with respect to the benchmark frontier available to all countries implying lack of ‘inclusive growth’ in the international trade arena.

The paper is designed to review in a considerably different perspective the national and the international economic problems like the ones we have gone through around 2008. This perspective gives prominence to the dominant role of ethical issues in the way crisis shaped and influenced public behavior. In a way ethical issues in different spheres of human response strongly shaped what happened. The paper starts with the well-known economic paradigms including those of Keynes, his admirers and critics, the celebrated neoclassical theories, and the ones based on rational expectations. The emphasis is on the implications for public policy and international crises. The discussion finally turns to the role of ethical considerations reflected in public behavior resulting in judgments on what is right and what is wrong. The views of the general public are as important as those of policy makers.