putting growth in its place

8/13/2019 Putting Growth in Its Place

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YOJANA January 2012 35

S I N D I A d o i n gmarvellously well, oris it failing terribly?Depending on whomyou speak to, you could

pick up either of those answers withsome frequency. One story, very

popular among a minority of Indianswho are doing very well, runssomething like this. After decadesof mediocrity and stagnation underNehruvian socialism, the Indianeconomy achieved a spectaculartake-off during the last twodecades. This take-off, which ledto unprecedented improvements inincome per head, was driven largely

by market initiatives. It involves asigni cant increase in inequality,

but this is a common phenomenonin periods of rapid growth. Withenough time, the bene ts of fasteconomic growth will surely reacheven the poorest people, and we are

rmly on the way to that.

But looking at contemporaryIndia from another angle, one

Putting Growth in its Place

ECONOMY

Jean Drze Amartya Sen

PERSPECTIVE

There is probably no other example,

in the history ofworld development,

of an economy growing so fast for so long with suchlimited results in terms of broad-

based social progress

could equally tell the following -more critical - story: The progressof living standards for common

people, as opposed to a favouredminority, has been dreadfullyslow so slow that Indias socialindicators are still abysmal. Forinstance, according to World Bankdata, only ve countries outside

Africa (Afghanistan, Bhutan,Pakistan, Papua New Guineaand Yemen) have a lower youthfemale literacy rate than India.To take some other examples, onlyfour countries outside Africa doworse than India in child mortalityrate; only three have lower levelsof access to improved sanitation;and none (anywhere not even inAfrica) have a higher proportion

of underweight children. Almostany composite index of theseand related indicators of health,education and nutrition would

place India very close to the bottom in a ranking of all countriesoutside Africa.

I

Jean Drze is Honorary Professor at the Delhi School of Economics, and Senior Professor at the G. B. Pant Social ScienceInstitute, Allahabad. Amartya Sen is Lamont University Professor, and Professor of Economics and Philosophy, atHarvard University.


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36 YOJANA January 2012

Growth and Development

So which of the two stories unprecedented success orextraordinary failure is correct?The answer is both, for they are

both valid, and they are entirelycompatible with each other. This mayinitially seem like a bit of a mystery,

but that initial thought would onlyre ect a failure to understand thedemands of development that gowell beyond economic growth.Indeed, economic growth is not thesame thing as development, in thesense of a general improvement inliving standards and enhancement

of peoples well-being and freedom.Growth, of course, can be veryhelpful in achieving development,

but th is requires ac tive publ ic policies to ensure that the fruitsof economic growth are widelyshared, and also requires makinggood use of the public revenuegenerated by fast economic growthfor social services, especiallyfor public health care and public

education.

We referred to this process asgrowth-mediated developmentin our 1989 book, Hunger andPublic Action . This can indeed

be an effective route to a veryimportant part of development;

but we must be clear about whatcan be achieved by fast economicgrowth on its own, and what it

cannot do without appropriatesocial supplementation. Sustainableeconomic growth can be a hugeforce not only for raising incomes

but also for enhancing peoplesliving standards and the qualityof life. Yet it is also importantto recognise that the impact ofeconomic growth on living standardsis crucially dependent on the nature

of the growth process (for instance,i ts sectoral composition andemployment intensity) as well asof the public policies particularlyrelating to basic education andhealth care - that are used to enable

common people to share in the process of growth. There is also,in India, an urgent need for greaterattention to the destructive aspectsof growth, including environmental

plunder as well as involuntarydisplacement of communities -

particularly Adivasi communities affected by development projects.

I n d i a s r e c e n t g r o w t h

achievements are indeed quiteremarkable. And India does needrapid economic growth, if only

because average inc om es areso low that they cannot sustainanything like reasonable livingstandards, even with extensiveincome redistribution. Havingsaid this, it would be a mistake torely on economic growth per se totransform the living conditions ofthe unprivileged. Along with ourdiscussion of growth-mediateddevelopment, in Hunger and Public

Action , we also drew attention tothe pitfalls of unaimed opulence

the indiscriminate pursui t ofeconomic expansion, without

paying much attention to how it isshared or how it affects peopleslives. A good example, at that time

(in the late 1980s), was Brazil,where rapid growth went hand-in-hand with the persistence ofmassive deprivation. Contrastingthis with a more equitable growth

pattern in South Korea, we wroteIndia stands in some danger ofgoing Brazils way, rather thanSouth Koreas. Recent experiencevindicates this apprehension.

Interestingly, in the meantime,Brazil has substantially changedcourse, and adopted far moreactive social policies, includinga constitutional guarantee of freeand universal health care as well as

bold programmes of social securityand economic redistribution (suchas Bolsa Familia ). This is onereason why Brazil is now doingquite well, with, for instance, aninfant mortality rate of only 9 per1,000 (compared with 48 in India),99 percent literacy among womenaged 15-24 years (compared with74 percent in India), and only 2.2

percent of children below five

being underweight (compared witha staggering 44 percent in India).While India has much to learnfrom earlier experiences of growth-mediated development elsewhere inthe world, it must avoid unaimedopulence an undependable andwasteful way of improving theliving standards of the poor.

Indias Decline in South Asia

One indication that somethingis not quite right with Indiasdevelopment strategy is the fact thatIndia has started falling behind everyother South Asian country (with the

partial exception of Pakistan) interms of social indicators, evenas it is doing so well in terms of

per-capita income. This point isillustrated in Table 1.

The comparison betweenBangladesh and India is a good placeto start. During the last twenty yearsor so, India has grown much richerthan Bangladesh: per-capita incomewas estimated to be 60 percenthigher in India than in Bangladeshin 1990, and 98 percent higher(about double) in 2010. But duringthe same period, Bangladesh has


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overtaken India in terms of a widerange of basic social indicators:life expectancy, child survival,fertility rates, immunization rates,and even some (not all) schoolingindicators such as estimated meanyears of schooling. For instance,life expectancy was estimated to

be four years longer in India thanin Bangladesh in 1990, but it had

become three years shorter by2008. Most social indicators now

look better in Bangladesh than inIndia, despite Bangladesh having

barely half of Indias per-capitaincome.

No less int riguing is that Nepal also seems to be catchingup rapidly with India, and evenovertaking India in some respects.Around 1990, Nepal was way

behind India in terms of almostevery development indicator.

Today, social indicators for bothcountries are much the same(sometimes a little better in Indiastill, sometimes the reverse), inspite of per-capita income in India

being about three times as high asin Nepal.

To look at the same issue fromanother angle, Table 2 displaysIndias rank among South Asiassix major countries, around 1990 as

Table 1

South Asia: Selected Indicators (1990 and latest)

South Asia China

India Bangladesh Bhutan Nepal Pakistan Sri Lanka

GNI per capita (PPP, current int $): 1990 *

2010877

3560543

1,8001,2804,950

5131,200

1,2102,780

1,4204,980

8137,570

Life expectancy at birth (years): 1990 2010

5864

5467

5267

5467

6167

6974

6873

Infant mortality rate(per 1,000 live births): 1990 *

2010

8148

9938

9644

9741

9670

2614

3816

Under-5 mortality rate: 1990 *

201011563

14348

13956

14150

12487

3217

4818

Maternal Mortality Ratio: 1990 2008

570230

870340

940200

870380

490260

9139

11038

Total fertility rate (children per woman): 1990 *

2009

3.9

2.7

4.5

2.3

5.7

2.5

5.2

2.8

6.0

3.5

2.5

2.3

2.3

1.6Access to improved sanitation (%): 1990 2008

1831

3953

--65

1131

2845

7091

4155

Infant immunization (DPT) (%): 1990 *

2008 *5966

6494

8896

4482

4880

8698

9596

Infant immunization (measles) (%): 1990 *

2008 *4771

6298

8797

5780

5082

7897

9594

Mean years of schooling: 1990 2010

3.04.4

2.94.8

----

2.03.2

2.34.9

6.98.2

4.97.6

Female literacy rate, age 15-24 years (%): 1991 a

2009 b49

743877

--68

3377

--61

9399

9199

Proportion (%) of underweight children 1990 cAround 2007 d

59.543.5

61.541.3

3412

-38.8

39-

2921.6

134.5

* Three-year average centered on the reference year (e.g. 1989-91 average when the reference year is 1990).a 1990 for China; the Sri Lanka gure is an interpolation between 1981 and 2001 gures.

b 2006 for India, 2005 for Bhutan, 2008 for Pakistan and Sri Lanka, 2009 for other countries (latest World Bank estimates).c 1988 for Bhutan, 1991 for Pakistan, 1987 for Sri Lanka.d 2005 for China, 2006 for India and Nepal, 2007 for Bangladesh, 2008 for Bhutan, 2009 for Sri Lanka (latest World Bank estimates).

Sources: Mean years of schooling and life expectancy from Human Development Report 2010 , on-line (http://hdr.undp.org); other indicators from World Development Indicators , on-line (www.data.worldbank.org ). Some of the country-speci c gures for 1990 are subject to a signi cant margin of error;the focus is best kept on broad patterns rather than exact numbers.


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well as today. As expected, in termsof per-capita income, Indias rankhas improved from fourth to third.But in most other respects, Indiasrank has worsened , in fact quitesharply in many cases. Overall,

India had the best social indicatorsin South Asia in 1990, next to SriLanka, but now looks second-worst ,ahead of only Pakistan. Looking attheir South Asian neighbours, theIndian poor are entitled to wonderwhat they have gained at leastso far from the acceleration ofeconomic growth.

The Case for a Comprehensive

Approach

The need for growth-mediateddeve lopment has no t been

completely ignored in Indian policy debates. The of cial goalof inclusive growth could evenclaim to have much the sameconnotation. However, the rhetoricof inclusive growth has gone hand

in hand with elitist policies thatoften end up promoting a two-track society whereby superior(world class) facilities are beingcreated for the privileged, whilethe unprivileged receive second-rate treatment, or are left to theirown devices, or even become thetarget of active repression ashappens for instance in cases offorcible displacement withoutcompensation. Social policies, fortheir part, remain quite restrictive(despite some significant, hard-

won initiatives such as the NationalRural Employment Guarantee Act),and are increasingly steered towardsquick fixes such as conditionalcash transfers. Their coverage,in many cases, is also sought to

be confined to below povertyline (BPL) families, a narrowly-de ned category that tends to shrinkover time as per-capita incomesincrease, which may even looklike a convenient way of ensuringthat social welfare programmes areself-liquidating.

Cash transfers are increasinglyseen as a potential cornerstone

of social policy in India, often based on a distorted reading ofthe Latin American experience inthis respect. There are, of course,strong arguments for cash transfers(conditional or unconditional) insome circumstances, just as thereare good arguments for transfersin kind (such as midday mealsfor school children). What isremarkably dangerous, however,is the illusion that cash transfers(more precisely, conditional cashtransfers) can replace publicservices by inducing recipients to

buy health and education servicesfrom private providers. This is notonly hard to substantiate on the

basis of realistic empirical reading,it is, in fact, entirely contrary to thehistorical experience of Europe,

America, Japan and East Asia intheir respective transformationof living standards. Also, it is nothow conditional cash transferswork in Brazil or Mexico or othersuccessful cases today. In LatinAmerica, conditional cash transfersusually act as a complement, not asubstitute, for public provision ofhealth, education and other basic

Table 2Indias Rank in South Asia (Six Countries)

Indicator India rank among 6 South Asiancountries

(Top = 1, Bottom = 6)

In 1990 Around 2009

GNI per capita 4 3

Life expectancy 3 6

Infant mortality rate 2 5

3. Under-5 mortality rate 2 5

4. Maternal mortality ratio 3 3

5. Total fertility rate 2 4

6. Access to improved sanitation d 4-5 a 5-6 a

7. Child Immunization (DPT) 4 6

8. Child Immunisation (Measles) 6 6

9. Mean years of schooling 2-3 a 4-5 a

10. Female literacy rate, age 15-24 2-3 a 4

12. Proportion of underweight children 4-5 a 6

a Ambiguous rank due to missing data for Bhutan (or Nepal, in the case ofunderweight children).Source: See Table 1. The six countries considered here are Bangladesh, Bhutan,India, Nepal, Pakistan and Sri Lanka.


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services. The incentives workfor their supplementing purpose

because the basic public servicesare there in the rst place. In Brazil,for instance, basic health servicessuch as immunisation, antenatal

care, and skilled attendance at birth are virtually universal. Thestate has done its homework almost half of all health expenditurein Brazil is public expenditure,compared with barely one quarter(of a much lower total of healthexpenditure) in India. In thissituation, providing incentives tocomplete the universalisation ofhealth care may be quite sensible.In India, however, these basicservices are still largely missing,and conditional cash transferscannot ll the gap.

The pitfalls of BPL targetinghave become increasingly clearin recent years. First, there is noreliable way of identifying poorhouseholds, and the exclusionerrors are enormous: at least threenational surveys indicate that,around 2004-5, about half of all poorhouseholds in rural India did nothave a BPL card. Second, Indiasof cial poverty line is abysmallylow, so that even if all the BPLcards were correctly and infalliblyallocated to poor households, largenumbers of people who are indire need of social support would

remain excluded from the system.Third, BPL targeting is extremelydivisive, and undermines the unityand strength of public demand forfunctional social services, makinga collaborative right into a divisive

privilege.

The power of comprehe-nsiveness in social policy is evident

not only from international andhistorical experience, but alsofrom contemporary experiencein India itself. In at least threeIndian states, universal provisionof essential services has become anaccepted norm. Kerala has a longhistory of comprehensive social

policies, particularly in the eld ofelementary education the principleof universal education at publicexpense was an explicit objective ofstate policy in Travancore as earlyas 1817. Early universalizationof elementary education is thecornerstone of Keralas wide-

ranging social achievements.Less wel l -known, but no

less significant, is the gradualemergence and consolidation ofuniversalistic social policies inTamil Nadu. Tamil Nadu was thefirst state to introduce free anduniversal midday meals in primaryschools. This initiative, muchderided at that time as a populist

programme, later became a modelfor Indias national midday meal

programme, widely regardedtoday as one of the best centrallysponsored schemes. The states

pioneering efforts in the eld ofearly child care have gone a longway towards the provision offunctional Anganwadis, accessibleto all, in every habitation. Tamil

Nadu, unl ike most other Indianstates, also has an extensivenetwork of lively and effectivehealth care centres, where peoplefrom all social backgrounds canget reasonably good health care,free of cost. The National RuralEmployment Guarantee Act(NREGA), another example ofuniversalistic social programme,

is also doing well in Tamil Nadu:employment levels are high, wagesare usually paid on time, andleakages are relatively small. Last

bu t no t le as t, Tamil Nadu hasa universal Public Distribution

System (PDS), which supplies notonly foodgrains but also oil, pulses,and other essential commodities.

Himachal Pradesh began this journey much later than Keralaand Tamil Nadu, but is catchingup very quickly. This is mostevident in the eld of elementaryeducation: starting from literacylevels similar to the dismal gures

for Bihar or Uttar Pradesh aroundthe time of Indias independence,Himachal Pradesh caught upwith the highest-performingKerala within a few decades. Thisschooling revolution was basedalmost entirely on a policy ofuniversal provision of governments c h o o l s , a n d e v e n t o d a y,elementary education in HimachalPradesh is overwhelmingly in the

public sector. Like Tamil Nadu,Himachal Pradesh has a well-functioning Public DistributionSystem, providing not onlyfoodgrain but also pulses and oiland covering both BPL (BelowPoverty Line) and APL (AbovePoverty Line) families. HimachalP r a d e s h h a s a l s o f o l l o w e dcomprehensive principles not onlyin the provision of essential social

services (including schoolingfacilities, health care, and childcare) but also in the provisionof basic amenities such as roads,electricity, drinking water and

publ ic transport. For instance,in spite of adverse topographyand scattered settlements, 98

percent of Himachali householdshad electricity in 2005-6.


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I t i s p e r h a p s n o t a n a c c i d e n tthat Kerala, Tamil Nadu and Himachal Pradeshalso tend to have the best social indicators amongall major Indian states. For instance, a simpleindex of childrens health, education and nutritionachievements clearly places these three states

at the top. Despite wide historical, cultural and political differences, they have converged towardsa similar approach to social policy, and the resultsare much the same too. There is a crucial lessonhere for other Indian states, and indeed for thecountry as a whole.

A Concluding Remark

We hope that the puzzle with which we beganis a little clearer now. Indias recent developmentexperience includes both spectacular success aswell as massive failure. The growth record is veryimpressive, and provides an important basis forall-round development, not least by generatingmore public revenue (about four times as muchtoday, in real terms, as in 1990). But there has also

been a failure to ensure that rapid growth translatesinto better living conditions for the Indian people.It is not that they have not improved at all, butthe pace of improvement has been very slow even slower than in Bangladesh or Nepal. Thereis probably no other example, in the history ofworld development, of an economy growing sofast for so long with such limited results in termsof broad-based social progress.

There is no mystery in this contrast, or in thelimited reach of Indias development efforts. Bothre ect the nature of policy priorities in this period.But these priorities can change through democraticengagement as has already happened to someextent in speci c states. However, this requires aradical broadening of public discussion in Indiato development-related matters. An exaggeratedconcentration on the lives of the minority of the

better off, fed strongly by media interest, gives anunreal picture of the rosiness of what is happeningto Indians in general, and sti es public dialogueof other issues. Imaginative democratic practiceis essential for broadening and enhancing Indiasdevelopment achievements. q

(E-mail: [email protected])

putting growth in its place

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