2022 GS3 Answer

Q. Is inclusive growth possible under market economy ? State the significance of financial inclusion in achieving economic growth in India.

Question from UPSC Mains 2022 GS3 Paper

Model Answer: 

Inclusive growth

Inclusive growth refers to the economic growth that benefits all sections of the society. It emphasizes the importance of equal distribution of resources and opportunities across different sections of the society. A market economy, which is primarily driven by market forces, may not always ensure inclusive growth. However, inclusive growth is possible under a market economy if certain measures are taken.

Possibility of inclusive growth under market economy:

A market economy can promote inclusive growth if certain conditions are met:

Competition: Competition among firms ensures that they provide quality goods and services at affordable prices, which benefits consumers across different income groups.

Access to credit: Access to credit is essential for small businesses and low-income households to invest in their businesses and improve their economic conditions.

Efficient public services: Access to efficient public services, such as education and healthcare, is essential to ensure that everyone has an equal opportunity to succeed.

Policies promoting social justice: Policies that promote social justice, such as progressive taxation and social welfare programs, can help reduce income inequality.

Significance of financial inclusion in achieving economic growth in India:

Financial inclusion refers to the provision of financial services to low-income households and small businesses. It is an essential component of inclusive growth in India. The significance of financial inclusion in achieving economic growth in India can be explained through the following points:

Encourages savings: Financial inclusion encourages low-income households to save, which can be used to invest in businesses and improve their economic conditions.

Access to credit: Financial inclusion provides access to credit to small businesses, which can help them grow and contribute to economic growth.

Promotes entrepreneurship: Financial inclusion promotes entrepreneurship by providing access to credit and other financial services to aspiring entrepreneurs.

Reduces poverty: Financial inclusion can help reduce poverty by providing low-income households with access to financial services and opportunities to improve their economic conditions.

Conclusion:

Inclusive growth is possible under a market economy if certain conditions are met, such as competition, access to credit, efficient public services, and policies promoting social justice. Financial inclusion is an essential component of inclusive growth in India as it encourages savings, provides access to credit, promotes entrepreneurship, and reduces poverty. To achieve inclusive growth, it is important to promote financial inclusion and implement policies that promote social justice and equal opportunities for all sections of the society.

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