Should the world de-grow to delay hitting the limits of growth? There is a growing outcry that the relentless push for GDP growth is causing social inequity and irredeemable planetary damage.
The term ‘Amrit Kaal’, a Vedic astrological term, was first used in context of India’s economic and social development by PM Modi, in his Independence Day speech, on 15 August 2021. Mr Modi said: “The goal of ‘Amrit Kaal’ is to ascend to new heights of prosperity for India and the citizens of India.” The PM went on to define the other goals of ‘Amrit Kaal’ as creation of an India where villages had the same facilities as cities, where the government did not unnecessarily interfere in lives of citizens, and which had the most modern infrastructure. According to the PM, after twenty-five years of ‘Amrit Kaal’, in the one hundredth year of India’s independence, we will realise our ultimate goal of becoming a developed country.
The concept of Amrit Kaal was picked up by everyone in the Government, with FM Nirmala Sitharaman aligning Union Budgets 2022 and 2023 with the goals of ‘Amrit Kaal’. Later on, PM Modi renamed ‘Amrit Kaal’ as ‘Kartavya Kaal’ a time to labour for achieving the goals of ‘Amrit Kaal’. Much effort is definitely required for becoming a developed country in the conventional sense, because by definition, a developed country has a nominal per capita GDP exceeding $22,000, while our current per capita GDP is barely $2,000. For comparison, China with a comparable population and an economy six times of ours has a nominal per capita GDP of only $12,000.
Ranked according to per capita income by purchasing power parity (PPP), two countries at the top are Ireland ($145,196) and Luxembourg ($142,490) both tax havens, with the Irish economy almost totally dependent on ill-gotten revenues from MAMAA (Meta, Apple, Microsoft, Amazon and Alphabet). Next on the list is Singapore, with its advanced financial markets. Then comes oil exporting Qatar, followed by Macao SAR of casino infamy.
USA, with a per capita income of $80,035, occupies the ninth spot. Significantly, the first eight spots are all taken up by small countries, mostly specialising in a single product. Though India is ranked at fifth place by total GDP, the GDP per capita (according to purchasing power parity) of India is $9,073, placing India at the 129th position out of about 200 countries.
Thus, looking at countries at the top of the per capita GDP table convinces one that per capita GDP is not the true measure of development. A better indicator of development could be the Human Development Index (HDI), a composite index of life expectancy, education, and income per capita. The Human Development Index, launched by UNDP in 1990, was developed by Indian Nobel laureate Amartya Sen and Pakistani economist Mahbub-ul-Haq.
According to UNDP: “HDI was created to emphasize that people and their capabilities should
be the ultimate criteria for assessing the development of a country, not economic growth
alone.” Proceeding on this premise, HDI is computed by taking the logarithm of per capita
income, reducing the significance of per capita income in the Index. Switzerland tops HDI
rankings, while Ireland, the leader in per capita GDP is placed sixth; Luxembourg is at rank seventeen, Singapore is at rank twelve and Qatar is at rank forty-two. India is at 132nd spot in the Human Development Index while China is at the 72nd spot according to per capita GDP, and at 79th place in HDI.
Even UNDP does not claim that the Human Development Index is a perfect measure of development. According to UNDP, HDI is not “a comprehensive measure of human development” and that the Index is slow to reflect recent policy changes and improvements to the lives of a nation’s citizens. Economists have criticised HDI for its data requirements, difficulty of interpretation and trade-offs between indicators.
For example, even major improvements in per capita income, which may be game changers for a developing country, will not improve that country’s HDI ranking, because the difference between the logarithms of old and new income would be negligible. At a more fundamental level, not everyone is happy with the choice of indicators, nor the way they are aggregated.
According to per capita GDP, and also HDI, developed economies broadly comprise Northern America and Europe, Israel, Japan and the Republic of Korea, as also Australia and New
Zealand. No doubt, all these countries have excellent infrastructure and advanced systems, but Western Europe and to some extent the US, have an unmis- takeable air of decadence, with most of the population not interested in honest work. Immigrants, even illegal ones, are a necessity to keep these countries running. There is great inequality, with a handful of people being super rich and the rest barely getting along.
On the positive side, all developed countries have a well-functioning social security net that takes care of citizens from cradle to grave. Government spending is humongous, funded by high taxes on goods, services and income, which drive up prices to astronomical levels, and which is a significant factor behind the high nominal GDP of many Western countries. A major reason for not endorsing the Western model of development is its non-sustainability; almost all Western countries have a negative population growth rate, therefore, embracing the Western model fully could result in extinction of the human race!
Thus, defining our own goals for the well-being and development of our country in ‘Amrit Kaal’, would be more appropriate. At the outset, we may acknowledge that prosperity beyond a point is meaningless and longevity, without good health, is a burden for the affected individual, as well as society.
Therefore, two major indicators used in computation of HDI, may need modification. Rather, considering the fact that Indians, unlike Westerners, are sociable people, there could be a goal for achieving social harmony by eradicating caste and creed-based discrimination. Given the inequalities in Indian society, economic and social equality, could be the next goal.
We also have to realise that natural disasters, environmental degradation, and biodiversity loss brought about by climate change can prove disastrous, diminishing the supply of nutritious food and safe water, and which may also lead to disease outbreaks, which would destroy the health care, and education systems we need to survive and thrive. Thus, protecting our environment by controlling over-population, pollution, deforestation, and desisting from burning fossil fuels, could be another goal. Apart from preventing climate change, nurturing the environment would benefit everyone immensely by preventing soil erosion, poor air quality, and undrinkable water.
Indian agriculture, that provides sustenance to 140 crore Indians and many others in foreign countries, is unable to provide a decent livelihood to more than 60 crore farmers toiling day and night in their fields. India, cannot become a developed country till far-reaching reforms that would increase agricultural productivity are carried out. The land released from agricultural operations could then be used for growing more fruits, vegetables and other high-value crops, to raise farmer incomes without degrading the soil and using less water, and in ways that do not harm the environment.
Finally, as pointed out by PM Modi, public infrastructure has to be improved to international standards. A related goal would be to improve the abysmal civic amenities of towns and villages, throughout the country. Much of the heavy lifting for achieving these objectives has to be done by the Government, but a lot depends on citizens who have to develop a respect for law, civic sense, and a feeling of nationhood and brotherhood.
We can draw inspiration from Mahatma Gandhi: “European civilization is no doubt suited for the Europeans but it will mean ruin for India, if we endeavour to copy it. This is not to say that we may not adopt and assimilate whatever may be good and capable of assimilation by us as it does not also mean that even the Europeans will not have to part with whatever evil might have crept into it.
The incessant search for ma-terial comforts and their multi- plication is such an evil … the Europeans themselves will have to remodel their outlook, if they are not to perish under the weight of the comforts to which they are becoming slaves… Let us engrave in our hearts the motto of a Western philosopher, ‘plain living and high thinking.’ Today it is certain that the millions cannot have high living and we the few who profess to do the thinking for the masses run the risk, in a vain search after high living, of missing high thinking.” (India of My Dreams: Young India, 30-4-’31).
(The writer is a retired Principal Chief Commissioner of Income-Tax)