ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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India’s Exclusive Growth

In the period since the early 1990s, India’s economy experienced exclusive growth, that is, growth that benefited the rich. The richest 10% of the population has been the recipient of a large and growing share of the incremental income generated by growth. Employment of the skilled—the rich—has been growing while the low skilled—the poor—have suffered progressive exclusion from employment. This paper investigates, theoretically and empirically, the rise and persistence of exclusive growth. What emerges is that the source of India’s exclusive growth lies in the nature and characteristics of the lead sectors, namely skill-intensive services.

We use the term “exclusive growth”—the antonym of the widely used term “inclusive growth”—to denote growth which tends to benefit a select segment—the rich—of the population. Or, to put it in another way, exclusive growth is growth from the gains of which the poorer segments of the population are largely excluded. The exclusion results essentially from the non-utilisation of the factors of production—unskilled and low-skilled labour—held by the poorer segments of the population. Exclusive growth is, in essence, growth in the production of goods and services which are intensive in capital and skilled labour—the factors of production held by the rich.

Hence, exclusive growth is associated with increasing income inequality as also with decelerating employment growth overall (a consequence of the declining employment of unskilled/low-skilled workers), together with an increasing skill bias in employment. These are precisely the trends that are observed in India through its period of rapid growth. India’s rapid growth has been exclusive growth.

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Updated On : 1st Mar, 2023
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