Inclusive Growth And Economic Growth

Introduction

There are few set of complicated questions as to how we can have sustainable growth and how can we reduce poverty. Inclusive growth is one of the main key factors to have stability financially, economically and socially. Inclusive growth is about the speed and the distribution of economic growth; precisely it’s about the income distribution. It has taken time for the policy makers to realise how important inclusive banking is for financial stability. One of the main drivers of inclusive growth is financial inclusion and an inclusive financial system. Inclusive growth has been the agenda of the government for a very long time but there has not been a significant improvement till date. One of the main reasons for this is because of the growing inequality that is prevalent in the system. It’s a humongous task to reduce this inequality, which exists in the financial system in terms of income distribution and financial access. This is because there is no financial inclusion, consumer protection and financial literacy, which are very important factors or drivers of inclusive growth. It is important to develop an innovative conceptual framework that sees inclusive growth as economic growth and low inequality (Zhuang, 2010).

Sources and need for inclusive growth

First we need to understand the factors it depends upon, namely income growth and income distribution (Rahul Anand, 2013). Some of the key determinants of growth are education and financial depth. There have been many studies conducted in this regard to understand what actually inclusive growth is and what its determinants are. Some studies claim foreign direct investment (FDI) has a positive impact on inclusive growth (Rahul Anand, 2013). Can we come to a conclus...

... middle of paper ...

... higher inequality.

Measures taken by RBI and government of India

The government of India has been taking efforts for inclusion like creation of State Bank of India in 1955, nationalization of commercial banks in 1969 and 1980, initiating the Lead Bank Scheme in 1970, establishing Regional Rural Banks (RRBs) in 1975, introducing a Self-Help Group (SHG)-Bank Linkage Programme in 1992 and formulating the Kisan Credit Card scheme in 2001 (Rangarajan, 2008). The measures taken to structure financial inclusive system by Reserve bank of India and the Government of India are as follows:

 Introduction of ‘No frill accounts’: In November 2005, the banks were advised to open no frill accounts with minimum balances. The required documents for no frill accounts have been provided in regional language. Overdraft facility was extended on no frill account by various state banks.