The imperative of social sector development for achieving the goal of inclusive growth in India: an analytical study

Abstract

Growth inclusiveness has remained the prime agenda of India’s economic development policy. India did experiment with trickle down approach to development for achieving the objective of income redistribution and social justice, but floundered on that by the end of fourth plan. Since then the focus is on human welfare and development approach. Indian planners targeted the removal of poverty and inequality as the goal and the fundamental element of our growth strategy. This inclusive growth model necessitates the social sector development, an approach which is an adjunct to the capability approach of human development and also ensures rapid and sustained growth. The present study intends to construct the composite index of inclusiveness for India by deploying principal component analysis. The study also examines the relationship between different components of social sector development and inclusiveness index of growth in India, using an autoregressive distributed lag model for the period of 1986–2016. The empirical results suggest that the estimated coefficients of the long-run relationship between social sector development and growth inclusiveness are significant for ‘education outlays’, ‘expenditure of water supply and sanitation’, ‘housing and urban development’, ‘welfare for marginalized class’, ‘spending on social security and welfare’ and ‘food storage and warehousing’. For the short-run coefficients ‘labour and employment’, ‘rural development’ and ‘food storage and warehousing’ are statistically significant for inclusive growth of India. The analysis reveals a tardy progress towards rendering growth inclusiveness in India.