The concept of Inclusive Growth is a development paradigm that ensures economic growth creates opportunities for all segments of the population and distributes the benefits of increased prosperity equitably across society. It is a concept that moves beyond the traditional "trickle-down" theory, aiming to combine high economic growth with equity and opportunity for all citizens. The idea gained prominence in Indian policy with the Tenth Five-Year Plan (2002-2007), which marked a shift towards inclusive and equitable growth, and was explicitly made the theme of the Eleventh (2007-2012) and Twelfth Five-Year Plans (2012-2017), which focused on "Faster, More Inclusive and Sustainable Growth". The problem it sought to solve was the paradox of rapid economic expansion coexisting with persistent disparities, where the benefits of growth were not equally shared.
The mechanism of Inclusive Growth works through key provisions focused on poverty reduction, income and wealth equalization, and human development. Key elements include Skill Development to harness the demographic dividend, Financial Inclusion to deliver banking services to disadvantaged masses, and targeted social sector development. It connects to the vision of social and economic justice enshrined in the Indian Constitution and aligns with the UN's Sustainable Development Goals. Related concepts and institutions include the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted on August 25, 2005, which serves as a social safety net, and the NITI Aayog's New India @75 Vision, which outlines a long-term strategy for inclusive development.
The primary issues arising from the pursuit of Inclusive Growth in India include severe Wealth & Income Inequality, where the top 10% hold over 77% of the national wealth, and the bottom 60% own just 4.8%. Another major issue is Jobless Growth, characterized by low employment elasticity in high-growth sectors like services and capital-intensive manufacturing. Persistent challenges also include a significant Digital Divide, with rural internet penetration below 40%, and poor quality of human capital despite nearly universal enrollment. The planning system, which championed the concept, was discontinued after the Twelfth Five-Year Plan (2012-2017), and a more flexible policy framework under NITI Aayog, established in 2015, replaced the Planning Commission.