Inequalities and Inclusive Development: Some Policy Perspectives for Indian Economy

Government of India emphasized inclusive growth and the strategy was achieving a particular type of growth process which will meet the objectives of inclusiveness and sustainability. The strategy was based on sound macroeconomic policies which establish the macroeconomic preconditions for rapid growth and support key drivers of growth. It includes sector specific policies and the institutional environment in which it occurs, achieves the objective of inclusiveness. While focusing on inclusive development one may ignore the inequalities which will have significant implications for growth and macroeconomic stability. It can concentrate political and decision making power with few, lead to suboptimal use of human resources, cause investment reducing political and economic instability. Some degree of inequality may not be a problem in so far as providing the incentives for people to excel, compete, save and invest to move ahead in the life. But, high and sustained levels of inequality especially “inequality of opportunity” can entail large social costs. Against the background, objective of the paper is to examine the drivers of inequality and suggest some policy prescriptions for addressing the issue. Therefore, we have reviewed literature, collected data from secondary sources and analyzed for arriving at conclusions. Despite the efforts of Government, there are challenges in achieving inclusive development while the initiatives are like symptomatic treatment to a chronic disease. Hence the following are suggested; Tax-GDP ratio has to be improved by broadening the tax base, raising corporate taxes and withdrawing sops and benefits to the Corporates. Social sector expenditure on health and education should go up. Labour laws need to be flexible so as to help the workforce as the rigid labour laws are acting as stumbling blocks for labour welfare in various sectors. Finally, implementation of gender budgeting should be enforced as a mandate for