VOICE & VIEWS

Dr. S Muraleedharan
Retired Head of Department, Maharajas College

1.Economic growth in many developing economies has been accompanied by rising inequality and uneven regional development. In your view, what macroeconomic policy interventions are most critical to ensure that growth becomes more inclusive and benefits marginalized sections of society?

Respondent: If we consider the first issue of inclusive growth, globally, a few pillars of inclusion are discussed: access, attitude, choice, partnership, communication, and policy. Access relates to the fact that some people may not be physically able to reach buildings, roads, or even properly maintained footpaths. These issues make accessibility difficult for many, including elderly people and those affected by disabilities or diseases. This is a question of physical accessibility. Similarly, some people may not be able to see and may require audio systems, while others may not be able to hear and may depend on visual communication. Therefore, an inclusive economy should provide access in both physical and non-physical terms.

The second pillar is attitude. This demands a cultural shift where society welcomes change and overcomes rigidities and prejudices that exist in the system. The third pillar is choice. The system should be flexible and provide opportunities for all sections of society. For example, women may be denied higher executive roles in certain organizations, and this should change. An inclusive society must accommodate diverse needs.

The fourth pillar is partnership. All stakeholders in society should participate in the growth process, and no one should be excluded. Those living in extreme poverty must be supported and brought into the mainstream. The fifth pillar is communication. In some systems, decisions are imposed from the top without allowing people to express their views. This should not happen. Information should be accessible to all at minimal or no cost.

All these aspects are reflected in policymaking. Policymakers should be accountable to the people. In some economies, such as Scandinavian countries, major policy decisions are discussed with public participation. Finally, inclusion is also about opportunities. Every individual should have sufficient opportunities to utilize their capabilities. This ensures participation from all sections, including scheduled tribes, fishermen, and women. If these pillars are ensured, inclusive growth becomes easier.

2. The Indian economy remains one of the fastest-growing globally, yet reports suggest rising risks from inflation, weak exports, and global uncertainty. How should policymakers balance growth momentum with macroeconomic stability in such a scenario?

Respondent: The issue relates to balancing growth and stability. Growth refers to an increase in national income at constant prices, or more precisely, a continuous rise in per capita income in real terms. India is one of the fastest-growing economies, but inflation remains a major concern and can also affect exports.Growth should not be evaluated only in percentage terms but also in relation to per capita income. Developed countries may grow at 1–2%, but their per capita income is very high, so even small growth rates represent large absolute gains. In India, although the growth rate is higher, the lower base of per capita income means the absolute gains are smaller. Therefore, growth should be assessed in context. Inflation today is lower compared to earlier decades, but it still requires careful management. Inflation above 5% remains a concern. The government attempted to address this by rationalizing GST rates, but rising global import costs reduced the expected benefits. Regarding exports, the situation is not entirely negative. India’s exports grew by around 6% in 2025–26. While traditional sectors like textiles and marine products faced challenges, sectors such as electronics, engineering goods, and pharmaceuticals performed better. This reflects diversification in both the composition and direction of exports. India has expanded exports to countries like the UAE, Netherlands, Singapore, and China, while the USA remains a major destination. Recently, sectors like marine products and textiles have also started recovering. Therefore, export performance is relatively stable.

3. Recent policy initiatives like Production-Linked Incentive (PLI) schemes aim to boost manufacturing and employment. In your view, how effective are such industrial policies in driving structural transformation and macroeconomic growth?

Respondent: The issue relates to the outcomes of the Production-Linked Incentive (PLI) scheme under the Make in India initiative. India had a similar approach during the pre-liberalization period under import substitution policies. The PLI scheme is expected to attract investments of around ₹2.16 lakh crore and generate approximately 14.39 lakh jobs. It has also contributed to increased production and sales in manufacturing. In specific sectors, mobile manufacturing has increased significantly, about 28 times since the introduction of Make in India. Mobile exports have reached around ₹2 lakh crore, while imports have declined by 77%. In the telecom sector, about 60% import substitution has been achieved. Around 85 automobile companies and 54 medical device manufacturers have benefited from the scheme. Additionally, about 65 gigawatts of renewable energy capacity has been generated. However, many outcomes are still in the pipeline. The success of the program depends on transparent data on import substitution across sectors. The true impact of such policies should be assessed based on the extent to which domestic production replaces imports, including both finished goods and raw materials.

4. The depreciation pressure on the Indian rupee due to high oil prices and global volatility has raised concerns. What are the macroeconomic implications of a weakening currency, and how should the central bank respond?

Respondent: The issue relates to the weakening of the Indian currency and the possible monetary policy response. Currency depreciation is one indicator of economic strength, but unlike countries such as Japan or South Korea, India’s net exports are not dominant. The depreciation of the rupee is mainly due to higher imports than exports, especially because of rising crude oil prices, which are paid in dollars. To address this, the central bank has taken measures such as maintaining gold reserves and increasing foreign exchange reserves, which are around $552 billion. Controlled depreciation can support exports by making them more competitive. Monetary policy may include increasing interest rates to control inflation and attract foreign capital. Higher interest rates can improve capital inflows and stability but may also negatively affect domestic investment and exports. Therefore, the central bank must carefully balance inflation control with growth objectives.