The Pursuit of Inclusive Growth

It was 2010, and around six months after the death of a beloved Chief Minister of Andhra Pradesh, Dr Y S Rajashekar Reddy. I was in a B School interview, when the panel suddenly starts a new line of questions on politics of AP. It then led to the rule of YSR, and his ambitious goals for inclusive growth in the state. Inclusive growth is where the economic growth creates growth and opportunities to all sections of the society. All people participate in the economic growth, directly or indirectly. The pursuit of inclusive growth involves investment in sectors like Agriculture, Industrial development, Education and Healthcare, Social welfare projects etc. Looking back to my interview question, for YSR to have Inclusive Growth as broad vision, in a developing country like India, is commendable.

With population growth across the world, the last 100 years has brought in a drastic divide between the people. Uber rich, extreme poor, were rarely used in the context of the 19th century world. Many events which happened in the last 100 years, like the world wars, the recessions, or the regional conflicts, which have only worsened the problem. The difference of income, and the lack of inclusive growth is visible not only in the developing countries, but also the developed world.

Let us look at the graph which indicates the total income of top 1% vs the total income of bottom 50%. Its shows a staggering and also frightening trend. The US being a capitalist economy always thrived on successful industries and businesses, and the consumerist lifestyle of the 20th century only added fuel to the fire. But should the Governments be doing enough to protect the bottom 50% of the people.  

What about the next graph. This is the Consumer price index of Housing, Education and all items. The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The cost of Education, has grown at a rate which is at least 5-6 times the rate of growth of other items. 

How can Education become so commercial?

Isn't Education a basic necessity? 
Should the Government have safety nets for most basic needs like Education, Health etc?

The charts are only of US, and are not indicative of other countries. With people and Governments across the world taking the US as the ideal model of development, till at least a decade ago if not now, most of us are going in the same direction. The story is the same in China to Japan to Europe to Asia; some better than the rest. The gap between rich and poor increasing; the most basic necessities are quickly going off reach of most people. 

The world population has grown from around 1.7B in 1900 to 7.7B in 2020. Rapid decrease in infant mortality rates, and increase in life expectancy, due to the advancements made in medicine and health care, are some of the major reasons for this increase. The growth was fuelled by India and China, and slowly the African countries have started to lead the growth. Is this rapid population increase a reason. Yes, definitely, but it may not be the only reason. We all know by now the dire consequences of the one child policy in China; though it drastically controlled the population growth rate. 

By now, it is clear that we need Universal prosperity for us to have prosperity in our lives. Everything else, is short lived. So what should the Governments across the world do? I may not be experienced enough the impossible question of inclusive growth. But over the past few years, some of the measures taken in India are bang in the right direction. Though I did not understand them then, I now feel it is commendable for Governments to take welfare measures within their limited means. 

- MNREGA was launched in 2005 to give employment with local development activities

- Education for all scheme was launched by the former CM of AP, Dr YSR in 2006, where the fees is paid by the Government till Graduation. 

- Health for all scheme was launched in 2007 again by the same CM, where even treatment in private hospitals is paid by the Government

- Prime Minister's Kisan Samman Nidhi and multiple other schemes which create a safety net for the farmers in India
- Very encouraging to see the Government schools in Delhi rise up to the standards of private schools

Not only these, some of the regulations in various industries ensured that the consumers are not taken for a ride. We can all think that these are unnecessary red tape of license raj, but Im now confident that they are there to stop India from becoming another US. 

- There are price caps for most drugs

- Taxi fares are capped. We cant just follow the demand model, even if it is practical.

- Strong regulations from telecom to real estate to even FMCG, not only protects consumer's interests but also to prevent predatory pricing, thus preventing monopolies. 

But are these enough, definitely not. Only Welfare schemes, or strides in Education and Healthcare are not enough. How can Governments bridge the gap between the rich and the poor, is going to be the key factor in the direction of inclusive growth. The measures taken by Governments are hardly reaching the masses, leave alone making the difference. In the 21st century, let us all demand these from our Governments; even if we don't need these, Universal prosperity can be the only way we can truly have peace and happiness.