It’s Not the GDP, Stupid!

An ordinary life The media is often silent about the biases in India’s growth process
An ordinary life The media is often silent about the biases in India’s growth process. Photo: Ishan Tankha

This is a time of considerable stir in Indian society and politics. There are many discussions and debates about the country’s policy priorities, involving a great diversity of participants and viewpoints. Lively arguments and agitations have also developed around a wide range of issues that had been neglected for a long time, such as corruption, administrative failure, capital punishment, violence against women and democratic reforms. There are also spirited arguments about India’s economic achievements and failures.

This abundance of questioning and arguing, facilitated by a vibrant media and robust democratic institutions, can be a great strength for the country. It is compromised, however, by a powerful bias in public discussions towards focusing mainly on the lives and concerns of the relatively privileged, including not only the very privileged but also others who are not right at the top but are certainly much more privileged — in affluence, education, health care, cultural opportunities and social standing — than the bulk of the Indian people. The issues that affect the lives, and even survival, of those who have been comprehensively left behind tend to receive remarkably little attention.

Issues of economic development in India have to be seen in the larger context of the demands of democracy and social justice. During the last twenty years, the Indian economy has done very well in terms of the growth of GDP (about 6 per cent per year in real terms in the 1990s, rising to more than 7 per cent in the last decade). India became the second fastest-growing large economy over the last two decades, next only to China. For a low-income economy, which had been mired in near-stagnation through centuries of colonial rule and which made slow progress in the decades following independence, this is surely a major achievement.

An Uncertain Glory Jean Drèze & Amartya Sen Penguin/Allen Lane 448 pp; Rs 699
An Uncertain Glory
Jean Drèze & Amartya Sen Penguin/Allen Lane 448 pp; Rs 699

However, the achievement of high growth — even high levels of sustainable growth — must ultimately be judged in terms of the impact of that economic growth on the lives and freedoms of the people. Over this period of rapid growth, while some people, particularly among the privileged classes, have done very well, many more continue to lead unnecessarily deprived and precarious lives. It is not that their living conditions have not improved at all, but the pace of improvement has been very slow for the bulk of the people, and for some there has been remarkably little change. While India has climbed rapidly up the ladder of economic growth rates, it has fallen relatively behind in the scale of social indicators of living standards, even compared with many countries India has been overtaking in terms of economic growth. For example, over the last two decades India has expanded its lead over Bangladesh in terms of average income (it is now about twice as rich in income per capita as Bangladesh), and yet in terms of many typical indicators of living standards (other than income per head), Bangladesh not only does better than India, it has a considerable lead over it ( just as India had, two decades ago, a substantial lead over Bangladesh in the same indicators). The history of world development offers few other examples, if any, of an economy growing so fast for so long with such limited results in terms of reducing human deprivations.

A huge part of the current discontent in the Indian media has been concerned with the bad news that India’s rate of GDP growth has slipped over the last couple of years. The fact that India’s high growth rate has fallen certainly deserves serious attention, even though such slowing has happened in the same period across the world (including in China, and also in Brazil, South Korea and elsewhere), and even though India’s new GDP growth rate of 5 or 6 per cent per year still places it among the world’s fastest-growing economies. The concern is important because economic growth can certainly help to improve people’s lives (not only by raising per capita incomes but also by generating public revenue that can be used for purposes of social advancement of the people), and also because a deeper analysis of the relation between economic growth and social progress is seriously overdue in India. What is remarkable is not the media’s interest in growth rates, but its near-silence about the fact that the growth process is so biased, making the country look more and more like islands of California in a sea of sub-Saharan Africa.

In earlier works, we have argued that development is best seen in terms of an expansion of people’s basic freedoms, or human capabilities. In this perspective, we have to recognize the importance of the two-way relationship between economic growth and the expansion of human capability, while also keeping in mind the basic understanding that the expansion of human freedom and capabilities is the goal for which the growth of GDP, among other factors, serves as important means. Growth generates resources with which public and private efforts can be systematically mobilized to expand education, health care, nutrition, social facilities, and other essentials of fuller and freer human life for all. And the expansion of human capability, in turn, allows a faster expansion of resources and production, on which economic growth ultimately depends.

This two-way relationship has been a central feature of the so-called ‘Asian economic development’, beginning with Japan immediately after the Meiji restoration, extending gradually to South Korea, Taiwan, Thailand and elsewhere, and ultimately making China the world leader both in raising economic growth and in expanding human capability. Those who dream about India becoming an economic superpower, even with its huge proportion of undernourished children, lack of systematic health care, extremely deficient school education, and half the homes without toilets (forcing half of all Indians to practise open defecation), have to reconsider not only the reach of their understanding of the mutual relationship between growth and development, but also their appreciation of the demands of social justice, which is integrally linked with the expansion of human freedoms.

Of course, a great deal more than economic growth is involved in the pursuit of a less deprived and less unjust India. For example, there is much evidence to suggest that Bangladesh’s rapid progress in living standards has been greatly helped by the agency of women, and particularly the fact that girls have been rapidly educated and women have been widely involved — much more than in India — in the expansion of basic education, health care, family planning and other public services as well as being a bigger part of the industrial labour force. Experiences of other countries, and indeed from particular regions within India as well, offer similar lessons. Given the extent and forms of gender disparity in India, there is an urgent need to focus not only on what can be done for Indian women (important as it is), but also on what Indian women can do for India — helping to make it a very different country.

Well-functioning public services, especially (but not only) in fields such as education and health, are also critical in fostering participatory growth as well as in ensuring that growth leads to rapid improvements in people’s living conditions. Some Indian states (such as Kerala, Himachal Pradesh and Tamil Nadu) have done reasonably well in this respect, reaping as they have sown, and there have also been positive, if partial, initiatives in some other states in the recent past. Nevertheless, the general state of public services in India remains absolutely dismal, and the country’s health and education systems in particular have been severely messed up. While the privileged are able to take refuge in private arrangements (expensive as they tend to be), the rest are deprived of essential facilities that ought to be available to all as a matter of right. Aside from diminishing the country’s prospects for participatory growth and broad-based development, India’s highly privatized and compartmentalized health and education systems (with very different opportunities for different social groups) also perpetuate social disparities — instead of reducing them, in contrast with what health and education systems as well as other forms of public support have tended to do around the world. Beyond the specific — and very important — cases of health and education, India also faces larger issues of accountability in the public sector as a whole. The future of the country depends a great deal on more effective democratic engagement with these momentous issues.

Indian democracy is seriously compromised by the extent and form of social inequality in India, particularly since democracy stands not just for electoral politics and civil liberties but also for an equitable distribution of power. While some aspects of social inequality in India have diminished in the recent past, new imbalances have developed, including heightened economic inequality and the growth of corporate power. Nevertheless, it would be a mistake to think that privileged interests are bound to override and overwhelm all attempts at sharing power more equitably. Indeed, even in this compromised state, Indian democracy offers significant opportunities for popular movements to flourish and resist the concentration of power and the neglect of the interests of the deprived.


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