The economy needed high growth and policies for fast expansion in labour-intensive sectors in order to ensure that poverty and employment problems are tackled, said Montek Singh Ahluwalia, deputy chairman, Planning Commission.
"Growth is an absolute essential because the direct impact it makes by generating incomes is greater than what can be achieved by any schemes," he said while delivering the first Ramakrishna Hegde Memorial Lecture on 'Poverty and Development: some reflection on the Indian experience'.
Growth will also determine the sustainability of targeted schemes for marginalised sections by ensuring that the money to finance them was available, he said.
The government needed to create a policy environment where the labour-intensive sectors can both modernise and expand, he suggested.
Other than that, management of risk and uncertainty was an area the government needed to focus on, particularly in view of the absence of insurance markets and social security in the country.
"With liberalisation, there is more transmission of volatility across systems. Income levels can be higher, but they are accompanied by larger shocks. This is not a problem if you have insurance. But our problem is that those markets have not been created in India," Ahluwalia said.
For instance, he said that in health, the insurance system available in India was not adequate. A situation where a person's risk cover could be withdrawn if it was revealed they were suffering from a particular health problem was "wrong from the regulatory point of view", he said adding the system was not compulsory and was not being extended to all groups.
Besides, there was a broad agreement that the government will need a new set of policies on agriculture, particularly on irrigation, watershed management in rainfed areas and diversification of agriculture from the current focus on cereals.
Special targeted schemes for the marginalised sections of society, which will not benefit from the growth process, needed to be put in place, but designed in a manner to ensure that the benefits reached the people they were intended for.
He also said India's performance was poor in health and education in comparison to other comparable countries and that the system had to be re-engineered to run the systems as decentralised ones responsible to local governments.
Ahluwalia also said measures of poverty needed to take into account factors like the impact of greater risks on account of liberalisation, pollution, health, education, access to drinking water, sanitation and intra-family equity in distribution."The concept of minimum levels needs to include something other than consumption. A multi-dimensional view of poverty is required," he said, adding the Millenium Development Goals of the United Nations reflected this view on poverty.