29 November 2013

Economic Growth in India in the context of a Gandhi vs Modi election: for what and for whom?

On Wednesday PRIA and IDS co-hosted a Question Time style panel on economic growth--what is it delivering and for whom?  We had Isher Ahluwalia, Santosh Mehrotra, Biraj Patnaik and Santhosh Mathew on he panel, chaired by Rajesh Patel, President of PRIA.

It was a lively discussion, with passion, frankness and  insight displayed by panel and audience alike.

Some key takeaways for me....

1. All of the panelists said that growth was essential for development.  I was a little disappointed that there was not a greater recognition that certain types are essential and other types are irrelevant and could be harmful (e.g that which corrupts and pollutes).  There seems to be an acceptance that these things are the price one has to pay for the good things that growth can generate (e.g. poverty reduction), but I simply think there is not enough of a focus on the quality of growth and the kinds of choices that Ha Joon Chang lays out in his book, 23 Things They Don't Tell You About Capitalism.

2.  We were reminded about how much economic growth of the period 2004-2010 (the highest growth period) reduced income poverty incidence (P0 the % below the poverty line)--over 100 million.  But there was no mention of the poverty gap (P1) and the poverty gap squared (P2) which measure the depth of poverty and are less sensitive to families just clawing their way above the line to make a big differences to the statistics. 

3. There was little mention of inequality, and yet Brazil's success is decreasing inequality was lauded.  I think it is probably easier to reduce very high inequality levels than it is to curb increases in lower initial levels, but I was surprised this issue did not surface, especially as I could see  Brazil/Turkey/Egypt style  unrest occurring over high tax rates and poor quality services.

4. Someone in the audience said, does it matter what public policy types think?  Surely all politicians care about is vote getting?  The panel said they were glad that politicians were so focused on doing things that captured votes (worse if they were insensitive) but they acknowledged that this led to short termism and populism.  There were also concerns that the media was now in hock to big businesses aligned with certain parties and what would this do to further corrode trust between the voters and politicians.  One idea for the panel was for civil society to align more around electoral units than administrative units, thus generating more political heat for poor public policy choices and electoral reward for the good choices.

5. Corruption was highlighted as a big issue in the growth story--was is a consequence of growth or a driver of it?  Views here were really mixed with some data cited that showed leakage and diversion from food programmes declining with others highly sceptical.  In a context of distrust it is obviously going to be a challenge to get credible data on corruption and for it to be seen to be credible!

6. On nutrition, I asked the panelists if the Government of India cared.  One of the panelists firmly said "no", the others chose not to defend the Government's record. To be fair all of the panelists recognised the need to do something about India's appalling record on sanitation and solid waste disposal.   At an earlier meeting with the Coalition for Sustainable Nutrition Security in India it was clear that the States are the drivers of innovation in nutrition, with Odisha and Maharashtra being cited frequently.

7. Finally on urban development, one of the panelists raised the importance of cities as drivers of economic growth for urban and rural areas, but that this would require infrastructure of all types to be built (roads, electricity, sewage) of course the strategic choices here are whether to invest in infrastructure that maximises growth or that which maximises poverty reduction.  Studies in Indian agriculture by Shenggen Fan have shown that these two aims lead to different patterns of investment. 

All in all an interesting discussion on an impossible set of exam questions (growth for whom, for what, and what to do about it?). 

At least there was the beginning of a recognition that the quality of growth is at least as important at the quantity.  This debate is only going to heat up as we near the election, especially give the rise of the BJP Chief Minister of Gujurat, Narendra Modi who is promising to focus on improving basic services for the poor and to tackle corruption, which he says is an inevitable consequence of social protection programmes promoted under the Singh/Gandhi Congress Government.  Its going to be an interesting 6 months in the world's largest democracy.

1 comment:

Shankar Chatterjee said...

Apropos to the points of discussion, I want add few points while author writes 'there is not enough focus on quality of growth ‘I do not agree rather I feel quality of growth has been taking place as an indicator I would like to mention Government of India has been using the words "Inclusive growth" which means growth covering of all echelons of the society and thus banking habit has developed even among BPL families. The Programmes like IAY, PMGSY, assets created under MGNREGS etc., have been focusing on quality development and thus quality of lives have been improving in rural areas. And thus many rural persons have been benefited. I do agree with the panelists while corruption was discussed as it is the 'greatest enemy in India'. I feel in the discussion socio-cultural issues have not been touched at all but these are sine qua non in Indian context. For instance dowry, drinking of liquor, high growth rate of population in rural areas etc, are major issues in many parts of India. While discussing development issues in India, region wise focus is important e.g North-eastern region has been suffering from infrastructure issues and C-D ratio is abysmally low than Southern region of India. Like these there many issues which were not touched even in the discussion. So I feel discussion was partial/incomplete. Dr. Shankar Chatterjee, Hyderabad, India