Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.
Inclusive growth is economic growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity to every section of the society. A market economy is one in which the allocation of resources and the prices of goods and services are determined by market forces, primarily supply and demand.
Even in a market economy, Government has resources and tools to steer the economy towards inclusive growth. And this can be done in the following ways:
- Government focussing on provision of public services like quality education and health which enhances the capability of the people.
- Measures to reduce corruption in day-to-day life of the people.
- Focus should be more in the sectors where the poor work ex. in agriculture and rural infrastructure.
- Focus should be more on productive employment generation rather than subsidies.
In the last few years, Government has taken several steps in improving the financial inclusion which has impacted economic growth in India in the following ways:
- More than 43 crore Jan Dhan Accounts have been opened which has mobilized the savings of the people resulting in higher investment and growth
- Financial inclusion helps in reducing income inequality and poverty leading to higher growth
- Through financial inclusion, Govt. has been able to transfer funds to poor through DBT (ex. Ujjwala scheme, PM Kisan etc) which protected livelihoods and supported demand in the economy leading to growth
- Financial inclusion has led to increased tax base and tax buoyancy, providing more resources to Govt. which has pumped these resources in stimulating the economy resulting in higher growth.
Inclusive financial system is a key to sustainable development and growth of a nation wherein all segments of the society have timely access to financial services at an affordable cost.
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