Skip to main content

High growth of gross national product cannot be panacea for development, argues senior economist

Kamal Nayan Kabra
By Rajiv Shah 
At a time when the so-called Gujarat model is being touted as the sole panacea for India’s economic ills, a recent book by Kamal Nayan Kabra, Malcolm S. Adisheshiah chair professor, economics of development and decentralized planning, Institute of Social Sciences (ISS), New Delhi, has sharply argued against this type of “growth orthodoxy” which propagates that rate of growth of gross national product (GNP), as determined by the market forces, is the sole criterion of development. Such a GNP-centric model, he says in his book, “Appropriate Development: People First”, published by ISS, is based on the assumption of “trickle-down processes” which could be achieved by “increased public revenue as a fallout of higher GNP”, which would help run “state-led anti-poverty programmes.”
Without mentioning “Gujarat model”, Kabra, who is former professor of economics at the Indian Institute of Public Administration, New Delhi, says, GDP-centric growth is being considered not just as “the sole condition for the achievement of objectives such as a good quality of life, poverty reduction, increasing employment”, it is being advocated to achieve “geopolitical ambitions of a certain brand of nationalism.” He adds, “A lot of empirical evidence is often cited by the votaries of this school to show a positive correlation between the growth rate and some improvement in the socio-economic indicators in arenas such as reduction in absolute poverty levels, and improvement in nutrition, literacy, health and so on.”
The book acquires significance for the students of Gujarat “model”, especially when economists such as Prof Jagdish Bhagwati, Prof Avrind Panagariya and Prof Bibek Debroi have variously written about how trickle-down effect has been “helpful” in overcoming the state’s poor human development index. While their “neo-liberal” views have been sharply contested, among others, by Prof Indira Hirway, an Ahmedabad-based economist, Kabra’s book further seeks to provide much-needed theoretical explanation of how trick-down effect cannot be termed as “development.”
Kabra spoke on the subject at a seminar organized at the Gujarat Institute of Development Research (GIDR), Ahmedabad, on April 18 during the Pravin.
Pointing towards “partial and limited nature” of the GNP-centric approach, Kabra says, “Evidence in support of the primacy of the GNP approach is sought to be related to the well-known and by now exploded myths buoyed up by rising public revenue out of the increased national income, larger public provision of the essential social services is also supposed to be an additional string to the bow.” He adds, this viewpoint has lately found a new nomenclature – “of inclusive growth.”
He underlines, “These neoliberal measures are operated in terms of a poverty-line that shows scant respect for the bare minimum human needs. Hence, there does not arise any concern with the essential, inviolable human dignity and the inalienable rights even of the targeted people.” Suggesting that this viewpoint is an imitation of some western economists, he adds, “One still comes across the estimates of global absolute poverty arrived at in terms of the poverty line defined as per capita daily consumption of a little over US$ 2.”
Kabra argues, “The GNP growth disregarding its composition, even with the neo-liberal measures for enhancing some token inclusion, can hardly go far to improve the distributive justice, livelihood adequacy and security and contribute to appropriate development.” But “the accolades showered on the great virtues of wealth creation qua wealth creation get thrown out of the front gate the moment one asks questions such as what does the GNP consist of, how and by whom is its composition decided, what are its social and environmental costs and the sharing of all the costs and benefits between different sections of society and the present and the future generations.”
In fact, Kabra says, “Since the GNP-centric development policy regime implies a free hand to the market forces, they acquire a big hand in deciding the pattern of production, especially by way of imitating the pattern seen in the rich countries.” In the third world countries, “the elites … tend to take the attainment of the life style and consumption pattern prevalent in the rich world as the summit of accomplishment and they go all the way to imitate their pattern of production.”
Such a viewpoint seeks to undermine the need for “expansion of the home market”. It overlooks the fact that “increase in the proportion of wage goods in the total product of a country by engaging the available work force in the decentralized production of the poor persons’ goods and services” should be central to development. The result is that in many third world countries “inherited inequalities persist on account of various institutional impediments arising from the pattern of land holdings, slow growth of agriculture, growing concentration of assets and production in the hands of the MNCs and large indigenous business conglomerates and such like factors.”
Kabra emphasizes, “These are furthered by means of various public policies that consolidate and accentuate inequalities, leading to a pattern of industrial development based on high rates of growth of demand for conspicuous luxury and ‘semi-luxury’ products as the only way to maintain high growth, as for example in India and Brazil (as shown by KN Raj, for India and Furado for Brazil). These changes may lead to tightening of democracy as the governments committed to high rates of growth may give further concessions and incentives to the upper income groups to increase demand that happens apparently at the expense of the weaker sections.”
Kabra says, “Evidence seems to be accumulating (and brought to wider public notice by the UNDP’s Human Development Index and the annual world economic and social reports of various international agencies) that the pattern of enlarged production with changed sectoral composition in favour mostly of the services and marginally in favour of the industrial sectors in most third world countries has done precious little to make any perceptible positive contribution to the improvement of the quality of life… for the huge number of the poor.”
In fact, “the microeconomic or industrial policy and investment projects decisions are entrusted to the oligarchic market forces by reposing faith in the efficiency and energy of the market forces with the state making some soothing noises about the virtues of competition, or rather the so-called free competition in the markets with some feeble and showy attempts to bolster up competition. These policies do not seem to bother about restraining the hugely powerful oligopolistic agencies calling the shots and their degeneration in to cronyism, as though these are a part of the script.”
Kabra points out, “Little wonder the neo-liberal state seems to find it increasingly difficult to manage the show of democratic legitimacy and lives from crisis to crisis in every sphere. Actually, the vast social disparities and structural social exclusion, combined with the spread of the crony corruption virus, and reduced and misdirected levels of state activities. are making the common citizen lose faith in the honesty and legitimacy of the state.” The ground reality is that “rapid technical progress has helped only very few of the developing countries, and it has certainly made the task of catching up with the developed world even more difficult.” And all the frantic effort “at innovation new products, new processes, new services and changing organizations -- certainly does not create the greatest amount of happiness for the greatest number of people”.
He further says, “The expenses and transactions that arise in the course of the operating the marketized politics and have become visible in the form of the growing size and incursions of the formally illegal ‘black’ economy, which feeds into the (perverse) growth of the economy. A huge illegal and undeclared economy gives rise to growth outcomes that leave the majority of the people high and dry: the goods and services that are meant for the poor and are affordable by them are losing their relative share and thus prevent the employment generation programmes from acquiring meaning in the sense of becoming a means for giving the people access to the required goods and services.”
Actually, he points out, the history of the Indian political processes during the last two decades suggests that major political parties “are basically committed to similar social interests in varying degrees and rarely frankly admit their real position on the basic policy issues. They simply engage in shadow boxing over the outcomes, while sharing a common ground on the policy choices. As a result, they seem to have reduced the politics of development to providing essential civic services and infrastructure facilities.”
Given this backdrop, Kabra favours what he calls “appropriate development, based on products, techniques, locations, agencies and ethos consistent with appropriate development.” Calling “appropriate development” as a “holistic concept of development”, he says, “An appropriate product-mix and several closely and organically inter-connected factors may enable to capture the multidimensionality of development.” He believes, this would mean “a lot of exercise required to devise an index of appropriate development capable of a crisp, short-hand quantitative index, like the Gross Happiness Index (GHI), incorporating several normative, qualitative dimensions of social change.”

Comments

ALSO READ

India failing to dictate diplomatic preferences of Nepal, Bhutan, is unfairly blaming Beijing: Chinese daily

By Our Representative
In a sharply-worded editorial, a top Chinese media outfit, described by BBC as state-run, has said, commenting on India's foreign relations with its neighbours, that "speculation and suspicion" is "certainly not diplomacy". Published in "China Daily", the largest circulating English Monday-to-Saturday newspaper with branches across the world, the editorial notes (September 20) that "several recent events" in Nepal and Bhutan, are "gnawing worrywarts in New Delhi".
The editorial -- which comes close on the heels of a sharp critique of India's foreign policy in a state-supported Russian media outfit, Sputnik International, calling India's anti-Pak diplomacy as having "gone awry" following Prime Minister Narendra Modi's "half-baked" push for anti-terror drill down "others' throat" -- says, the " worrywarts" include "Nepalese troops taking part in a joint…

Ahmedabad, GIFT, Adani city get 1.68 lakh acre ft Narmada water; Gujarat's rural areas just 4.27 AF: Letter to CM

Counterview Desk
Well-known farmer rights leader Sagar Rabari, in an open letter to Gujarat chief minister Vijay Rupani, has demanded a transparent account of Narmada water, saying, while he has received a "routine reply" from him to his earlier, the data emerging from his RTI application show huge quantity of water being directed to Ahmedabad, the 10 km stretch of Sabarmati for the Ahmedabad riverfront, and nearby elite urban areas, including the Adanis' Shantigram township and GIFT City.

17 lakh Jharkhand elderly, widows, differently abled do not receive pension: Public hearing told, aadhaar is a hurdle

By Our Representative
Hundreds of elderly, widows, single women and differently-abled persons from different districts of Jharkhand gathered near the Raj Bhavan in Ranchi for a public hearing organized by the Jharkhand Right to Food Campaign and Pension Parishad demanding the right to universal social security pensions ahead of World Elderly Day on October 1.

Ethnocide in Caribbean island filmed following award winning docufilm on Jamaica's anti-colonial Indian roots

International awards winner for Best Feature Documentary Linda Aïnouche for “Dreadlocks Story” (2014), which shows how Indians are entangled in the Jamaican society, and how Hinduism was a source of inspiration for the Rastafari movement, is all set to release her new documentary, “Marooned in the Caribbean”, which aims at documenting the awful desolating living conditions that Raizal people, the native inhabitants of San Andres Archipelago, endure.
Sons of slaves, these islanders have fallen prey to what the Colombian government calls Colombianization. “It’s a process”, according to her, “which kills the Raizal culture; it’s the killing of the Raizal soul. Colombianization subjugates Afro-descendants of San Andres to an ethnocide.”

Explorer, director and producer, Linda Aïnouche writes exclusively for Counterview: ***
Nobody escapes from blood and thunder in Colombia, and definitely not in the archipelago of San Andres, situated closer to Managua and Kingston than Bogota. The Raizal p…

Accused of being RSS plant, Modi man, Hyderabad Urdu varsity chancellor asks President to probe "irregularities"

Counterview Desk
Refused entry in the Maulana Azad National Urdu University (MANUU), the central university's newly appointed chancellor Firoz Bakht Ahmed, who claims to be grand nephew of Maulana Abul Kalam Azad, has, in a letter to the President of India, said that MANUU vice-chancellor (V-C) Dr Aslam Parvaiz has accused him of being an RSS plant and a Modi man, whose sole aim is to "interfere in the working of the university".

India to deport Rohingya refugees, as the world moves towards prosecuting Myanmar for genocide

By Tapan Bose*
Seven Rohingya Muslims refugees who were held at a detention centre in Assam since 2012 will be handed over to Myanmar. The Supreme Court of India has refused to stop their deportation. The new Chief Justice of India Ranjan Gagoi said, "We are not inclined to interfere on the decision taken".

An elite Kutir set up by Modi far from the "madding" crowd: This Gandhi museum is formal, unapproachable

By Rajiv Shah
Have you ever heard of a Gandhi museum, sough to be projected as the “largest” on the Mahatma, yet totally inaccessible, in sharp contrast to Ahmedabad’s humble, approachable and unassuming Gandhi Ashram on the banks of Sabarmati, set up by the Mahatma during the heydays of the freedom movement? It exists about 30 kilometres away, its idea was conceived by none other than a person who has today become even more inaccessible than he ever was: Narendra Modi, India's Prime Minister.

Gujarat BJP MLAs, youth leader "incited" attack on North Indians: Cong releases video

Counterview Desk
Senior Gujarat Congress leader Shaktisinh Gohil, currently in charge of Bihar and national spokesperson, All-India Congress Committee, has sent a legal notice to chief minister Vijay Rupani threatening criminal case and civil defamation suit for accusing him with "baseless statement" that he was responsible for attacks on north Indians in Gujarat.

History less known: Kasturba's role as an independent woman and a freedom fighter in her own right

By Nandini Oza*
Even the most deserving of women do not find a place that equals their worth in history. Kasturba is one such woman whose contribution to India’s struggle for freedom has been exemplary, and yet, it has not received the recognition it deserves. Kastur Makhanji Kapadia was born in the year 1869, the same year and in the same town of Porbandar in Gujarat as Gandhiji. In fact she was older than Gandhiji by a few months.

Poor response to tenders for Gujarat's bid for the world's tallest statue, no international firm shows interest

By Our Representative
The Gujarat government’s claim that its decision to build the world’s highest statue in the world, in the memory of Sardar Vallabhbhai Patel, would attract “tremendous” response top international construction companies, has gone phut. The state government floated international tenders in August to build the statue, which is slated to be 182-metres high. Despite the “international” character of the tenders and big claims, well-informed Sachivalaya sources close to Gujarat chief minister Narendra Modi say, “not one international firm has come up to offer to carry out the construction activity.”