A vision of sustainable growth

The task before India’s next leader is to elevate the level of national discourse from fault-finding and finger-pointing to one that looks at a specific scorecard of progress.

November 04, 2013 12:14 am | Updated 01:01 am IST

Is India doing as well as it wants to? We were proud of our GDP growth when it was high; now we are dismayed. Even in those years of high growth not so long ago, we were not happy with the progress of inclusion in growth, and the pace at which social and economic inequalities were being reduced. Nor could we be happy with the deterioration of our natural environment in our hunger for material and GDP growth. We are not doing well on any of the three goals we have set ourselves: faster growth, more inclusive growth, more sustainable growth.

If India wants to do better as a nation, it should face up to the truth and change the structure of discourse. Our public discourse is crippled by several disabilities. In our competitive politics, debates promptly descend into fault-finding and finger-pointing.

We are split not only on political party lines; also divided in our ideologies of development. Some advocates of high GDP growth as a panacea can be extremists. In this acidic atmosphere, listening to those whom one has declared as enemies is hardly easy.

International comparisons

Third, we are too sensitive about our image abroad. We fear to admit the truth about ourselves because it will be reported abroad. This is almost pathological.

We may not want them to know, but others do know how we are doing. After all, there are many international comparisons. Faster, more inclusive and more sustainable growth is not only our goal. It is the goal of many other countries, too. In fact, as it emerged in the Global Economic Symposium in Kiel last month, these could be summarised as the goals of the entire international community. With these international comparisons, anyone can know how well India is doing compared with other countries. Also, we can learn from others how to do better.

First, how well is India doing compared to others? Many comparisons have been made by international agencies. Among the clearest is the Sustainable Economic Development Assessment (SEDA) framework recently developed by The Boston Consulting Group (BCG). SEDA is an instrument to assess the effectiveness of countries in converting GDP growth to ‘well-being’ of citizens. SEDA considers performance along 10 dimensions as indicators of overall well-being. These are: GDP per capita, economic stability, infrastructure, employment, education, health, income inequality, governance, civil society and impact on the environment. SEDA correlates growth in GDP per capita with other variables to determine a coefficient of transformation of GDP wealth into overall well-being.

SEDA compares the relationship between levels of wealth and well-being of all countries in the most recent year for which BCG had the data, which was 2011 for most countries. It includes a comparison of the performance over the previous five years: how was growth in wealth in these years converting into well-being? The combination of these two measures provides an evaluation of the ‘policy-matrix’ of the country’s growth strategy, that is, how is improvement on all dimensions being managed along with growth. Since India’s goals are faster, more inclusive and more sustainable growth, the SEDA analysis is relevant.

Worse off than peers

How well we are doing in converting increase in GDP (which was high in the years BCG has studied) to well-being can be assessed by comparing India’s performance with that of its peers. BCG has chosen 12 peers: three other BRICS countries, five countries in South-East Asia including Indonesia and the Philippines, and four neighbours — Pakistan, Bangladesh, Sri Lanka and Nepal. India seems to be doing worse than its peers.

The two dimensions along which India fares worst are generation of employment and protection of the environment while growing its GDP. It ranks relatively high in terms of its present position, with respect to governance and economic stability. But according to the assessment, its performance on both these counts has deteriorated in recent years.

Lessons from abroad

What can we learn from other countries about how to improve performance? At the Global Economic Symposium, the Bertelsmann Foundation of Germany presented its study on “Winning Strategies for a Sustainable Future.” Thirty-five countries that appear to be leaders in developing strategies for sustainable growth were studied, examining quality of strategies, frameworks for implementation, and results. The list was then narrowed to five countries for deeper study. From the study of these 35 countries, and further insights from the five, five key success factors were chosen. Two of these must be highlighted because they are the starting points of the process of faster improvement.

The first is that sustainability policy derives from an overriding concept and guiding principles that are made to permeate significant areas of politics and society. And the “best practice” to make this happen is to get specific in national debates on a new scorecard of progress. Effective scorecards are not merely lists of measures put together. They have an overarching concept to integrate measures of growth, social impact and environmental sustainability.

Balanced scorecard

The concept of a balanced scorecard to measure and report progress is being adopted by leading corporations to formulate strategies for sustainable growth. It makes corporations accountable for the impact their growth has on the environment and society. This is different from the anaemic paradigm of corporate social responsibility (CSR) where expenditure of a small portion of profit, howsoever made, is considered a discharge of responsibility. So too for nations: a strategy of growth first, with whatever consequences it has on the environment and society, is not sustainable. Inclusion and sustainability must be achieved along with growth. Balanced scorecards are being used by leading nations too.

The second requirement is the development of a sustainability policy that is implemented in a participatory manner. Therefore, the task for countries is to develop participatory formats. Not only must large numbers of people be engaged, but different constituents must listen to one another to develop an integrative vision of the country’s future.

The force to change arises from a tension created by the acceptance of the truth of where one is, and its distance from the aspirational goal to which one is committed. There is too little impetus to change when the truth about current reality is obfuscated by the fear of looking small, or the goal is set too low because what one really wants seems beyond reach.

We must have an integrative vision to unite us, and a balanced scorecard to guide us. The task for India, to be taken up by whosoever will lead it and those who will assist them, is to lead and facilitate this new discourse.

(Arun Maira is a member of the Planning Commission. The views expressed here are personal.)

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