I was awakened early one morning recently by someone who said he was enormously enjoying my on-going debate on economic growth in India. I was very pleased that I had given someone some joy, but I also wondered what on earth he could be talking about, since I have not been involved in any such debate. As it happens, I am getting a steady stream of telephone calls and electronic communication about this alleged debate. Since I could not generate the memory of any such debate, I tried to recollect any solitary remark on economic growth in some other context that I might have made in the last few months. I managed to resurrect the memory of having said in passing, in a meeting of TIE (The Indus Entrepreneurs) in Delhi in December, that it is silly to be obsessed about overtaking China in the rate of growth of Gross National Product (GNP), while not comparing ourselves with China in other respects, like education, basic health, or life expectancy. Since that one-sentence remark seems to have been interpreted in many different ways (my attention to that fact was drawn by friends who are more web-oriented than I am), I guess I should try to explain what that remark was about.
GNP growth can, of course, be very helpful in advancing living standards and in battling poverty (one would have to be quite foolish not to see that), but there is little case for confusing (1) the important role of economic growth as means for achieving good things, and (2) growth of inanimate objects of convenience being taken to be an end in itself. One does not have to “rubbish” economic growth — and I did not do anything like that — to recognise that it is not our ultimate objective, but a very useful means to achieve things that we ultimately value, including a better quality of life.
Nor should my remark be taken to be a dismissal of the far-reaching relevance of comparing India with China. This is a good perspective in which to assess each of the two countries and a lot of my past work — on my own and jointly with Jean Dreze — has made use of that perspective. It is of some historical interest that comparing India with China has been the subject matter of discussion for a very long time. “Is there anyone, in the five parts of India, who does not admire China?” asked Yi Jing (I-Tsing, in old spelling) in the seventh century, on returning to China after being in India for ten years, studying at the ancient university in Nalanda. He went on to write a book, in 691 AD, about India, which presented, among other things, the first systematic comparative account of medical practices and health care in these two countries (perhaps the first such comparison between any two countries in the world). He investigated what China could learn from India, and what, in turn, India could assimilate from China. Comparisons of that kind — and more — remain very relevant today, and I have discussed elsewhere the illumination we can get from such comparisons in general, and in comparative medical practice and health care in particular (“The Art of Medicine: Learning from Others,” Lancet, January 15, 2011).
What goes wrong in the current obsession with India-China comparison is not the relevance of comparing China with India, but the field that is chosen for comparison. Now that the Indian rate of economic growth seems to be hovering around 8 per cent per year, there is a lot of speculation — and breathless discourse — on whether and when India may catch up or surpass China's over-10 per cent growth rate. Despite the interest in this subject, comparable to that in the race course (the betting comes from the West as well as Asia), this is surely a silly focus. This is so not merely because there are so many elements of arbitrariness in any growth estimate (the choice of prices for weighting is only one of the problems, as any serious economist knows), but also because the lives that people are able to lead — what ultimately interest people most — are only indirectly and partially influenced by the rates of overall economic growth.
Let me look at some numbers, drawing from various sources — national as well as international, in particular World Development Reports of the World Bank and Human Development Reports of the United Nations. Life expectancy at birth in China is 73.5 years; in India it is still 64.4 years. Infant mortality rate is 50 per thousand in India, compared with just 17 in China, and the under-5 mortality rate is 66 for Indians and 19 for the Chinese. China's adult literacy rate is 94 per cent, compared with India's 65 per cent, and mean years of schooling in India is 4.4 years, compared with 7.5 years in China. In our effort to reverse the lack of schooling of girls, India's literacy rate for women between the ages of 15 and 24 has certainly risen, but it is still below 80 per cent, whereas in China it is 99 per cent. Almost half of our children are undernourished compared with a very tiny proportion in China. Only 66 per cent of Indian children are immunised with triple vaccine (DPT), as opposed to 97 per cent in China. Comparing ourselves with China in these really important matters would be a very good perspective, and they can both inspire us and give us illumination about what to do — and what not to do, particularly the glib art of doing nothing.
Higher GNP in China has certainly helped it to reduce various indicators of poverty and deprivation, and to expand different aspects of the quality of life. So we have every reason to want to encourage sustainable economic growth, among the other things we can do to augment living standards today and in the future. Sustainable economic growth is a very good thing in a way that “growth mania” is not. We need some clarity on why we are doing what (including the values we have about our lives and freedoms and about the environment), and getting excited about the horse race on GNP growth with China is not a good way of achieving that clarity.
Further, we have to take note of the fact that GNP per capita is not invariably a good predictor of valuable features of our lives, for they depend also on other things that we do — or fail to do. Compare India with Bangladesh, where, as Jean Dreze pointed out in an article many years ago, “social indicators” are “improving quite rapidly” (“Bangladesh Shows the Way,” The Hindu, September 17, 2004). In terms of income, India has a huge lead over Bangladesh, with a GNP per capita of Rs.3,250, compared with Rs.1,550 in Bangladesh, in comparable units of purchasing power parity. India was ahead of Bangladesh earlier as well, but thanks to fast economic growth in recent years, India's per-capita income is now comfortably more than double that of Bangladesh. How well is India's income advantage reflected in our lead in those things that really matter? I fear not very well — indeed not well at all.
Life expectancy in Bangladesh is 66.9 years compared with India's 64.4. The proportion of underweight children in Bangladesh (41.3 per cent) is a little lower than in India (43.5), and its fertility rate (2.3) is also lower than India's (2.7). Mean years of schooling amount to 4.8 years in Bangladesh compared with India's 4.4 years. While India is ahead of Bangladesh in male literacy rate in the youthful age-group of 15-24, the female rate in Bangladesh is higher than in India. Interestingly, the female literacy rate among young Bangladeshis is actually higher than the male rate, whereas young females still do much worse than young males in India. There is much evidence to suggest that Bangladesh's current progress has much to do with the role that liberated Bangladeshi women are beginning to play in the country.
What about health, which interests every human being as much as anything else? Under-5 mortality rate is 66 in India compared with 52 in Bangladesh. In infant mortality, Bangladesh has a similar advantage, since the rate is 50 in India and 41 in Bangladesh. Whereas 94 per cent of Bangladeshi children are immunised with DPT vaccine, only 66 per cent of Indian children are. In each of these respects, Bangladesh does better than India, despite having less than half of India's per-capita income.
This should not, however, be interpreted to entail that Bangladesh's living conditions will not benefit from higher economic growth — they certainly can benefit greatly, particularly if growth is used as a means of doing good things, rather than treating it as an end in itself. It is to the huge credit of Bangladesh that despite the adversity of low income it has been able to do so much so quickly, in which the activism of the NGOs as well as public policies have played their parts. But higher income, including larger public resources, will enhance, rather than reduce, Bangladesh's ability to do good things for its people.
One of the great things about economic growth is that it generates resources for the government to spend according to its priorities. In fact, public resources typically grow faster than the GNP: when the GNP increases at 7 to 9 per cent, public revenue tends to expand at rates between 9 and 12 per cent. The gross tax revenue, for example, of the Government of India now is more than four times what it was in 1990-91, at constant prices — a bigger rise than GNP per head.
Expenditure on what is somewhat misleadingly called the “social sector” (health, education, nutrition, etc) has certainly gone up in India, and that is a reason for cheer. And yet we are still well behind China in many of these fields. For example, government expenditure on health care in China is nearly five times that in India. China does, of course, have a higher per-capita income than we do, but even in relative terms, while China spends nearly two per cent of its Gross Domestic Product (GDP) on health care (1.9 per cent to be exact), the proportion is only a little above one per cent (1.1 per cent) in India.
One result of the relatively low allocation to public health care in India is the development of a remarkable reliance of many poor people across the country on private doctors, many of whom have little medical training, if any. Since health is also a typical case of “asymmetric information,” with the patients knowing very little about what the doctors (or “supposed doctors”) are giving them, the possibility of fraud and deceit is very large. In a study conducted by the Pratichi Trust, we found cases of exploitation of the poor patients' ignorance of what they are being given to make them part with badly needed money to get treatment that they do not often get (we even found cases in which patients with malaria were charged comparatively large sums of money for being given saline injections). There is very definitive evidence of a combination of quackery and crookery in the premature privatisation of basic health care. This is the result not only of shameful exploitation, but ultimately of the sheer unavailability of public health care in many localities around India.
The central point to seize is that while economic growth is an important boon for enhancing living conditions, its reach depends greatly on what we do with the fruits of growth. To be sure, there are large numbers of people for whom growth alone does just fine, since they are already privileged and need no social assistance. Economic growth only adds to their economic and social opportunities. Those gains are, of course, good, and there is nothing wrong in celebrating their better lives through economic growth, especially since this group of relatively privileged Indians is quite large in absolute numbers. But the exaggerated concentration on their lives, which the media tend often to display, gives an incomplete picture of what is happening to Indians in general.
And perhaps more worryingly, this group of relatively privileged and increasingly prosperous Indians can easily fall for the temptation to treat economic growth as an end in itself, for it serves directly as the means of their opulence and improving lifestyles without further social efforts. The insularity that this limited perspective generates can even take the form of ridiculing social activists — “jholawalas” is one description I have frequently heard — who keep reminding others about the predicament of the larger masses of people who make up this great country. The fact is, however, that India cannot be seen as doing splendidly if a great many Indians — sometimes most Indians — are having very little improvement in their deprived lives.
Some critics of huge social inequalities might be upset that there is something rather uncouth and crude in the self-centred lives and inward-looking temptations of the prosperous inner sanctum. My main concern, however, is that those temptations may prevent the country from doing the wonderful things it can do for Indians at large. Economic growth, properly supplemented, can be a huge contributor to making things better for people, and it is extremely important to understand the relevance and role of growth with clarity.
(Amartya Sen, who won the Nobel Prize in Economics in 1998 and was awarded the Bharat Ratna in 1999, is Professor of Economics and Philosophy at Harvard University. He is Founder and Chair of the Pratichi Trust, which he started with his Nobel money.)
Keywords: Indian economic growth, social inequalities, India-China comparison, Life expectancy, social opportunities, health care
This article highlights the sordid reality behind all the India shining and India rising hype. Essentially we are a third world country with first world pretenses and unless our corrupt governments change for the better this ugly reality will persist.
It is commendable and assidious effort of Indian policymakers that even in recession we sustained and became second fastest growing economy in world. But we should not be obsessed with growth-mania as evaluating superficially only in GDP-GMP terms will never make India a developed country. If we are not able to provide basic amenities, education, medical facilities to our people in the same proportion as our economy is growing, then it is only a big number which can attact foreign investors. Dr Sen's remark reveals ugly reality of Indian economy which pompously challenges itself as second fastest growing economy. We are behind than tiny Bangladesh , then why we are comparing even with giant China ?
The problem with the obsession with the best and highest is that it doesn't often reflect the inherent equity and quality issues. Therefore, it's important for Indian planners to design policies and strategies to redistribute the created national wealth as mentioned by Prof. Sen in a more equitable manner. This will require an enabling environment i.e. of structures and institutions those are transparent and accountable. On the other hand coroporate sector, which is primarily pre-occupied with the growth rate must contribute towards India's MDG targets rather than just stopping with pilot projects through their CSR instrument e.g. to reduce the information asymmetry or governance and capability deficit.
Time to stop harping on GDP and GNP and for GNH-gross national happiness! The emphasis on progress hinged to economics is proving catstrophic and working in development one is left wondering why India is following the same path that is causing crisis in the west. Time to put a stop to measuring progress economically. Why not a transformation to making the human being central rather then the $$$$$!Dr Sen is too good and his analysis as usual should be an eyeopener as it invokes a clarion call for change.
Dr. Sen's article has highlighted the fact that even a country with a lower per capita income (Bangladesh) is doing better in health care and basic education. His comparison of our country with China is apt and has opened many an eye and mind that dream continously of 'overtaking' a fast growing China in economic growth. An equally popular economist that he used to be Dr. Manmohan Singh has failed miserably in the past 6 years despite holding the top post in the Indian polity. One wishes if Dr. Sen can decorate the post of the Prime Minister or atleast a policy maker in the government to set things right.
I dont think that people who are 'lucky enough' to taste the fruits of economic growth are oblivious to the underprivileged. But they SIMPLY DON'T CARE.
A K Sen the Noble Laureate only one from India in Economics, knows much better than the many more economists in India, the growth obsession is existing but first India needs impressive growth record then comes the development aspects, and equity and egalitarian aspects. The sustainable growth itself is a question. Without agricultural growth any other growth is not going to contribute towards reducing the poverty incidence in India due to the Agriculture is a big sector which involves majority of people and 65%% people depends on primary sector, the trends showing the growth in number may be true but this is jobless growth. Looking at China for our problems may not be wise, both are having some in common and in many ways we are different. India requires its own strategy to cope with the existing problems, neither state not the market is unable to render any solutions to agriculture. An alternative mechanism is needed to address the present problems in the country.
Prof. Sen has brought to the fore a fundamental point of what is 'economic growth' for? " Here he has briefly but effectively shown that what matters is the growth of "well-being" of the population not the GNP per se. He has also pointed out that GNP growth can greatly help to increase the ability of the policy makers to enhance that "well-being". What remains puzzling, however, is (a) how a democratic form of government, that has many advantages over an authoritarian one (as in China), could foster such a wide disparity of "well-being" between a privileged minority and the majority of the population, after more than six decades of democratic governance in India. And (b) how does it happen that Bangladesh with less than half the income per head of population and with its fragile democratic experience, could attain in several indicators of "well-being" mentioned by him, a comparable or higher position than that of India. Can political Economy provide a self- consistent explanation of these puzzles?
The unjustified craze for growth fueled certain globalization measures, which opened up the Indian markets for western goods and services without India receiving comparable benefits.In the process, the inequity and relative impoverishment - not absolute impoversishment - of the masses prevented them from acquiring the wherewithals necessary for availing basic good quality lives in terms of health care, nutrition and education. With proper control, globalization could have been of immense value in rapid development of India. Unfortunately, the way corrupt politicians and greedy industrialists managed globalization, they denied these advantages to the people of India.
Mr.Mathew, Through Taxation our Govt robs from the productive citizens and pays to the political cronies and bureucrats who create most of the mess. We need to get the Govt out of people lives and let the masses determine their own economic destiny through free markets. What is killing our Agriculture/Industry is the price controls and archaic regulations.Once govt gets out, free market will do the wonders.
Mr. Sen has correctly mentioned that We should not only compare the Economic growth with China. There are lot many factors which affect the people at large. Economic growth does help in improving the living standard but we could not ignore the importance of Health and Education which are not improving despite of increased GNP rate.
This is the real 'Idea of Justice'. GNP is not a true indicator of national advancement. Azim Premji had to deliver funds for the development of primary education in India. Our state machinery is obsessed with nuclear deals and huge defence spending. True defence lies in the self reliance of an Indian farmer, True security lies in the safety of our women.
According to my opinion instead of Economic growth Intensive growth is more important. Economic groth does not rule out disparity in wealth between rich and poor. 'Intensive Growth' is what more important.This will reflect more of our Country's progress and its standing.
We as indians need to be proud of the fact that the Indian economy is growing at a pace above the conventional Hindu growth rate. I am confident that the ordinary citizens of the country will benenfit from this, though it may take time due to the slow nature of the trickle down growth concept. I wish to complement the attention Prof. Amartya Sen is drawing to the social and wefare limitations of the growth which India is facing today. It is high time that our policy makers spent their time nd efforts in correcting these imbalances. India needs to embark on higher social spending especially in sectors like mass education, public health care and nutrition. This requires policy corrections elsewhere. Our public policy should focus towards eliminating/minimising corruption. Corruption has creeped into all walks of life in India threatening the efficacy and productivity of any public spending. Studies by National agnecies have revealed that less than 15% of funds allocated for welfare programmes reach the real beneficiaries. The indicators raised by Dr. Sen in regard to quality of life could have been much higher if the benefits of public programmes had really reached the beneficiaries in full or close to it. It is heartening to note that we as Indians (majority) are reluctant to pay taxes. It is a known fact that taxation is efficient only in the organised sector of employment. We follow a system where a government employee having a percentage income of the likes of a cine artist, agriculturist or a trader paying higher taxes than the latter. India need to focus on educating our population about the need to share the resources/income through taxes for the uplift of the masses. Urgent reforms in the domestic political and judicial systems are important as we head towards occupying a larger role in the international economic and political arena. The Indian polity should have ways and means of limiting or eliminating the influnce of the Rajas and Kalmadis! A combination of the GNP growth rate and real reforms in these crucial areas can lead India to a position of leading nations of the world.
Economic growth, properly supplemented, can be a huge contributor to making things better for people, and it is extremely important to understand the relevance and role of growth with clarity - says so Amartya Sen in his past para. The question is, how it can be supplemented. And who would? The Noted economist Prime Minister neither speaks out nor executes when the economic growth is tilting totally towards the privileged class. His silence is assumed by increasingly prosperous Indians aka wealth gatherers, barring a few, as weakness and apparently seems true. The policies implemented in the fast pursuit of GDP are sallying out with ugly shape, sans executive control or fear. In such a situation couldn't India be seen as doing splendidly (not as much as Amartya Sen sees) if a great many Indians, sometimes most(70 percent) Indians, are having very little improvement in their deprived lives, though? Jholawalas may not be wrong absolutely then.
This kind of prescription is bit difficult to follow for our policymakers, for they naively believe that growth in GDP alone is enough and the things that really matter will be resolved on their own. Why Prime Minister Manmohan Singh and his deputies Montek Singh and Rangarajan fail to grasp a reality which is so simple, is beyond my comprehension. If they don't understand Sen's arguments, then something is really wrong with them and if they do and yet don't act accordingly, they they are being incompetent in their professions. I'm sorry to say this but I see no other plausible epxlanation.
I too agree that 'sustainable economic growth' is an oxymoron if followed as at present. It would need extremely courageous political and corporate will power to make the term meaningful. The most immediate necessity for sustainable growth is to start thinking small, give humane impetus to rural livelihoods and agriculture and stop encouraging urban greed.
Fantastic article. The clarity with which Dr Sen discusses this issue is refreshing.
Comparing China and India in some numbers is superficial and what one could make of that? Here is a free nation completely of its choice and a choice well made to be what it is. I am not shamed here for I am free. I know I have to pay for that and its expensive too.
we need proper functioning democracy to achieve prosperity for all Indians instead of mafia-controlled, pseudo democracy plundering whole country.
I immensely enjoyed the well researched commentary by Prof. Sen. It is timely and I think the debate could be made more relevant by including findings of comparative environmental stresses resulting from any economic growth. Water resources are strained beyond their limits both in China and in India, and pray some discussion on the subject can be woven in the larger discourse on quantifying sustainable economic growth and on limits to growth. The science-based governing options for this water resource desire continued local participation. Perhaps a future program at the proposed university by Nalanda Mentor Group could include comparative research in China and India on this water resource subject and in the process, contemplate incorporating due guidance from IIT Roorkee and from its counterpart in China. I resonated with the views above from Prof. Madhusudan Katti. I sincerely hope other scholars and journalists who have recently written and spoke about on the parallel subject, would share their voices here-in.
The cavil over economic growth must now bring in a sense of nuanced understanding about these numbers in any motivated electronic discourse. Prof. Amartya Sen needs to be complimented for rightly pointing out that 'the central point ... reach depends greatly on what we do with the fruits of growth'. The poverty of action is indeed the pivotal issue. The classic case in point is the growth story line being witnessed in Haryana. The economic growth and social regression have a one to one relationship. In fact, a 2007 official estimate has put one in every four households under the BPL category. The temptation of cornering central fiscal packages was the main motivation for this bureaucratic creativity. The development deficiency thus thrust upon the state did get articulated at a subsequent hustings. Hopefully the high economic growth states in India as well as Pranab Da will demonstrate fundamental learnings from this discourse of Prof. Sen during their respective budget sessions.
Dr. Manmohan Singh and Dr. Amartya Sen do respect each other and the former has to take a cue from the latter on the social development which Mr. Sen has been advocating for the last several decades. He has compared almost everything with India's neighbours and he could have reasoned the abysmal percentage of growth on key areas of development was marred with massive corruption that plagues this country.
The obsession with GDP simply reflects that there is India and there is Bharat and the influential class that controls things cares not a fig for Bharat, where almost all the symbols of a failed nation reside, yet India is quite unconcerned and unbothered by failed Bharat, even though anyone with an iota of sense would know the two are inseparable in reality. So, if you worry about failed Bharat come back after sixty years, when India should have grown up and become a serious place. In the meantime, much ugliness is still to unfold.
"this group of relatively privileged and increasingly prosperous Indians can easily fall for the temptation to treat economic growth as an end in itself, for it serves directly as the means of their opulence and improving lifestyles without further social efforts" is a very important point that Dr. Sen has brought about in his this writ-up. In fact it is clearly visible in Modern India. "it is extremely important to understand the relevance and role of growth with clarity" as it is meant for freedom. Dr. Sen is joyous when someone gets joy because of him. Let me request Dr. Sen that it will give immense joy to large Indian population if he make Indian understand value of independence which is the centre point of your subject "Economy".
This article clarifies the notion by some media reports that Dr. Sen has criticized GNP growth rate. This will also make our policy makers think that growth rate in itself is not an end but a means only. We should not blindly we follow the lifestyle of West (especially America).
I dont know much on economics. However, I would say our growth has not reflected in our living conditions. Only Multi-Billionaires take much of the growth. Government says public spending is more, but couldnt see in reality.
Really a very good article, which gives many ideas on real economic development and highlights the relationship between GNP and overall development of the people. At the same time, it also clarifies how GNP can be used a means rather than an end for the human development and prosperity.
One wonders what happened to the Millenium Development Goals.
Self adulation from the rulers only talks of foreign fund inflows,booming stock market and GDP growth.
These are all financial figures.
Can we not publish, in the popular media figures relating to calorific intake per head per day, average weight of children in urban slums and villages in differnt age groups,incidence of different vaccine preventable diseases in different age groups of children, access to filtered water supply, access to medical facilities etc.?
A sharp, insightful, and much-needed critique of the national obsession with the economic growth rate. What we do with the fruits of the growth is indeed far more important than mere growth for its own sake. As an ecologist, however, I must express my continued puzzlement at the use of the term "sustainable economic growth" which Dr. Sen also uses several times here. Isn't the term an oxymoron? How can one possibly "sustain" such "growth" for any significant period of time in a world of finite resources? I know from his other writings that Dr. Sen recognizes the environmental ramifications of our economic activities - so it is doubly puzzling for me to see him use this phrase. How long can the nation possibly sustain this economic growth? We are already seeing (but turning a blind eye to) an ongoing collapse of the ecological foundations upon which this current economic growth very much depends. Not only must we temper the mania for growth with questions about what we are doing with the fruits of that growth for the majority of the people in the country, we must also ask how this growth is ripping the nation's ecological fabric apart, and what we need to do to repair this very basis for our long-term sustainability - without perpetual growth. It is well past time we start working towards a steady-state economy (rather an an ever growing one) where the economy may bear truly sustainable fruit that does not come at the expense of more lives, human and non-human, which really make life worth living.
The article puts things in perspective. First, the growth mania is created (or atleast strengthened) by India Inc. and people who look forward to invest in India. These parties play an important role in the growth story. Hence, their opinion needs be weighed. Looking at what could be done with growth. Government gets caught at a cross roads 'whether to reinvest in growth or invest in social sector' (both seem important and hence proportioning becomes difficult). Above all these, even the existing programmes government has taken up do not seem to be doing well (recent article in The Hindu about NREGA is an example).
This clarification by Dr.Sen on the phoney debate of Growth Vs Equity is welcome. I do not think that people who want India to emerge as an economic super power will be oblivious to the needs of their fellow country men who lack the means that provide them basic living standards. Our main problem is that the various social programes are inefficiently administered and there is huge leakage in the process. Public anger is on this leakage and colossal theft. You can not raise the Human Development Index until you rectify this structural defects and increasing allocation to social sector before fixing the system is like throwing money out of the window.
Mr Sen said very rightly that the idea of comparing India and China only on the basis of GNP is skewed. We should not only concentrate on GDP but should contain other factors also. Comparing only with GDP or GNP is a skimpy process.
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