The Pains of Growth
A prosperous economy – but not a prosperous people.
India has experienced a high rate of economic growth over the last decade but in many respects this growth has not translated into overall development of the country and society, raising many questions marks regarding the sustainability of the Indian models of economic growth.
Usually economists measure economic growth in terms of gross domestic product (GDP) or related indicators, such as gross national product (GNP) or gross national income (GNI). In terms of GDP growth, India has done remarkably in the last
decade, maintaining 7 to 8 percent growth and at times even higher. At the end of the last century, India's GDP was around US$480 billion. After the economic reforms introduced in early 1990s gathered steam, the GDP grew five-fold to reach US$2.3 trillion in 2015 (as per IMF estimates). This GDP growth during January-March 2015 was 7.5% compared to China's 7%, making it the fastest growing economy.
This GDP growth has not translated into high levels of development because that is a holistic and allencompassing concept. GDP growth only does not determine that the state or area in question, by having high economic growth, could necessarily be developed. This is specifically the case with India. It is important to note that in terms of development, it is not the aggregate GDP that is important, but what matters more is the GDP per capita. India has much higher levels of GDP than, say, Singapore, New Zealand or Belgium, but the latter are more developed in almost all respects than India due to the higher GDP per capita.
India lags behind the mentioned countries in GDP per capita because of her mammoth population, which is nearly 1.2 billion. The measure of GDP per capita is achieved by dividing the GDP over the number of people in the country. Singapore, New Zealand, etc. are more developed than India because they have a very low population in comparison to India. According to economists, if a country has to have sustainable development its economy must grow at a rate three times higher than its population growth. In case of India, the country has experienced economic growth between 7-9 percent in the last decade but in real terms its population growth has not been below 2.5 percent.
India has been able to have sustainable development. However, for such development, high level of economic growth and low level of population growth is the only condition. Sustainable development also requires a country to have a high human development index (HDI). The HDI is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living. The health dimension is assessed by life expectancy at birth, the education dimension is measured by means of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita. On all these counts of the HDI, India lags far behind the ‘developed’ states of the West.
Coming back to GDP per capita as a yardstick of development, even the measure is not a good tool of gauging development in a country. In this situation, spending patterns that are skewed towards the rich exclude the needs of the poor. Thus growth in per capita GDP may not lead to a reduction in poverty or to broader social and economic development. In case of India, economic growth has not resulted in significant levels of reduction in poverty. According to the 2014 World Bank revised methodology for calculating poverty, the world had 872.3 million people below the poverty line, of which 179.6 million people lived in India. In other words, India with 17.5% of total world's population had 20.6% share of world's poorest in 2011. The levels of poverty in India can also be gauged from the fact that more than 300 million people, almost one-fourth of the country’s population, in India (a figure close to the population of the USA) still have no electricity. Even the access of basic social services like potable water and access to sanitation facilities to most Indians is not available.
Development not only concerns humans material needs but also improvement in their social conditions. Thus, development is growth plus change including social, cultural and institutional change for the better as well as economic transformation. This is a very vast but quite appropriate explanation of the concept of development. Development in the social context may mean improving the life standards of people. In this context, India lags far behind the developed countries as the life standards of the majority of Indians leave a lot to be desired. Insofar as cultural change is concerned, a lot of Indians may have shattered traditional shackles to have obtained some measure of social and political mobility, still a very large number of Indians could not shatter the traditional fetters to develop their personalities and social conditions.
This is very much evident from the fact that the caste system is still very much entrenched in India, official claims notwithstanding. Institutional change in India may have occurred significantly but the very features of good governance that primarily include, transparency, accountability, participation and rule of law, are still very much absent in India. The country may have a democratic political system but this system is more ostensible than democratic at the core. In other words, democracy is not only the name of elections but a whole culture. India has not been able to evolve a true democratic culture. For instance, democracy requires equality of all people and equality of opportunity but having a well entrenched caste system that in many respects is quite institutionalized. However, India has held national elections in a very sustainable manner since the country’s birth, which is something of a great achievement in the Third World.
Keeping the afore-stated facts and figures in view, one can safely determine that India has indubitably achieved high rates of economic growth but has largely failed to use this growth for overall development which must be an alarming situation for policymakers. The writer holds a doctoral degree in International Relations and is a political-economy and security analyst.