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Nehru legacy? GDP-centric growth has had 'no positive impact' on people's livelihood

By Dr Kamal Nayan Kabra* 

Experience has shown that many counties adopt measures to go in for the growth of their GDP, basically in the existing framework, though also going in for, at the same time, new products and technologies and similar other changes. It is believed that by means of this process enough new job opportunities would emerge to meet the economy’s needs both in terms of numbers as also in terms of the requisite remuneration (wages) as also the supplies of the goods and services to maintain the economy on an even keel.
Prevalence of such situations generates both unequal societies as also inadequately developed or unbalanced economies. Different countries with varying experience of this kind spawns an unequal, divided world.
For long India finds itself in such an unenviable situation. Let us look back at the experience of India over the past over seven decades. During this period the state along with the big private companies have been making vigorous efforts to increase the rate of growth of GDP of the country. It also expressed its intention to correct socio-economic imbalances and move towards a fair and just society.
They have been trying large-scale modernization and industrialization and creation of supporting infrastructure facilities. Some other efforts are also been visible to make good the disabilities, gaps and distortions bequeathed by the departing British Raj.
In fact, ever since the time of the First Plan the intention to follow the course of GDP growth-led high productivity has been expressly chosen as a pragmatic course of interventions for development.
A bird’s eye view the story of how India has been doing shows that a lot has been done to increase the growth of big capital-guzzling industries. However, the same unfortunately cannot be said about the demands and legitimate aspirations of the country’s vast and growing labour force. Yes many policies were announced and in part have been carried out as well.
Growth rate, though fluctuating, has noted remarkable gains. But it seems pro-employment and pro-equity measures for decent work for everyone remains a distant dream. Later on following greater submission to the pulls and pressures of the rich and powerful who are eh major players in the growth game, mainly the private corporates, employment and equity receded in the background and the supremacy of the growth policies came to the fore much more boldly than before the sign post of the neo-liberal era.
For a pretty long time every year over 10 million new entrants to the labour force try to find a toehold in the work force. Many estimates about the huge reserves of wealth in the hands of a small super rich sections (both declared and hidden) indicates that just as there is a virtual glut in the labor market, similar glut can be seen in the coffers of the plutocrats. The gap between the needs and urges of the two opposite poles remains unbridgeable. The growth game lumbers on but the struggles for livelihood adequacy and security remain unrewarding for a huge majority.
The decentralized small town and rural industries, just like small farmer agriculture, across the country have received step-motherly treatment. Little wonder the “ half-real, half-illusory” services sector precariously stole the march over the rest of the sectors.
Thanks to the pro-rich farmer modern high tech agriculture, India is able to export food grains while the country remains high on global hunger/malnutrition index. In fact the creation of a growing marketable and marketed surplus is essential for creation of market for industries and services remains subdued. The modern high tech industries heavily leaning on the external economic forces have contributed to India’s chronic balance of trade deficit, met by drawing on the capital account and contributions of the Indians working abroad.
Assured and adequately rewarding employment adds to equalities and creates basis for sustainability/social desirability of a real self-reliant India. But the dream of the planners to adopt the pragmatic path floundered, with early signs appearing even by late 1950s. By mid-1960s the warning by many about the swelling tide of the people suffering the pangs of absolute poverty sounded global alarm bells.
What it means is that modernizing-industrializing growth of GDP could not lead to the outcomes expected from it. Of course, some stray attempts, right from land reforms to progressive taxation, to setting up of pachayats and decentralized institutions and abolition of privy purses, nationalization of banking and many key industries and, to cap them all, the much hyped garibi hatao and other rural development programmes of asset distribution, were undertaken. 
Now a bunch of populist measures in new avatars galore. Even some private goods are supplied by the state. Freebies are a new vote and support game.
However, the stubborn fact remains. In an iniquitous society and economy growth cannot guarantee adequate employment, gradually leading to the creation of a sellers' labour market, that is, an era approaching full employment situation, except as frictional unemployment. In any case, development cannot be treated as a mere quantitative economic phenomenon of very large and increasing production and has to address the social problems in their totality in small but self-sustaining sure steps over a reasonable period.
Actually, four problems, employment, equality, poverty reduction and environmental protection, are very closely inter-related. These problems are also seen in very high income countries, say the Global North. Why does one miss the apparent truth?

Employment without roof, home, hearth, food

A major part of such worse-off sections -- with their own stratified and caste and disparities-ridden character, working in farming, small and traditional, mainly village and small town industries -- are able have low level of linkages with much larger outside markets. They largely meet local and regional demands: The forte of rural, cottage and handicrafts industries. Their incomes are low and uncertain and standard of living pitiable.
Also, they face innumerable uncertainties and insecurities. They get little public/social goods and services by the state, even recent policies are silent on the universalization of these services and facilities to enable citizenship and market participation on a meaningful scale.
Often they are placed in a portmanteau category called informal/unorganized economy with people eking out subsistence and as partly employed, partly or un-or under-employed. Their size varies according to the criteria and sources of data, but as a matter of consensus, it can be placed to cover about three-fourths of Indians.
Regular organized sector employment, largely in the rich, urban and metropolitan areas, or in remote, inaccessible areas where natural resources are located, forces the employment-seekers to migrate and exposes them to many vulnerabilities with often hidden costs on the regions and rest of the stay-put members of the family from which people have to migrate.
Indeed, employment is a many-faceted search for livelihoods. It is both physical and social lebensraum for the very essence of human existence. The incidental outcome of growth of production and the gains made by the organizers, investors-owners and managers and public agencies hardly leave enough for the workers who are recruited, often through touts and contractors, who also take their own cuts.
The meaning of employment without a roof, home and hearth and adequate food and physical rest for the next day’s work are parameters of the market economy. The growth centric view of the economy and development perspective hardly takes a humanistic, social and moral view of employment in a democratic society true to the Constitutional values and ideals. It is some such perspective which is implied when one speaks of decent employment as the relevant category.
It is ironic indeed that even many highly industrialized rich countries, governed by democratically elected states, enjoying very high per capita GDP/GNP and dominated by mega corporate entities operating on the global scale, commanding humongous capital and potent productive resources in various forms and counted as developed economies and democratic societies, are unable to provide regular, remunerative and secure participation to their labour force.
This situation may well be termed as one of adverse inclusion, as a feature of an essentially involutionary society. Even in cases where various forms of social security is provided, pucca and full decent employment may remain a far cry. This kind of situation comes to prevail irrespective of their enviable high levels of GDP/GNP, an electoral political system (based on each country’s history and culture) and a fairly comfortable place in the global market system.
This kind of treatment meted out to the bulk of the work force is neither a recent nor an isolated phenomenon. With persistent lack of employment to a reckonable part of the population there comes to prevail high levels of inequalities (generally non-functional). 
This results in the creation of pockets of unacceptable poverty among some sections; the levels and spread of such poverty simply mock their high levels of total and per capita GDP. Nor have they been able to maintain a reasonable ecological balance. Thus, overall, these countries seem to be bereft of the critical essential attributes of a developed nation/society.
Theoretical examination and empirical evidence show that growth of GDP and social indicators -- such as high and rising levels employment, increasing equality, reduction of poverty and better ecological balance -- do not always and necessarily move in the same direction. Certainly by itself GDP has little to do with normative issues and outcomes.

Lofty ideals set aside

India talked of many lofty ideals and a grand social-national vision (Jawaharlal Nehru and Rajendra Prasad on August 15, 1947 and in the Constituent Assembly). But the policies and their implementation did not match with declared aims. It means the existing power balance was greatly potent and able to call the shots for its partisan purposes. On the contrary, the declared aims were given in practice an inferior position. The likely beneficiaries were not able to, despite the democratic rights and numerical upper hand, get the policies calibrated in their favour.
The GDP/GNP centricity is generally used by most agencies as the sole over-riding criterion for the global ranking of nations on the metric of “growth as development”, irrespective of the levels and direction of unemployment, inequalities and poverty. However, the recently released Global Social Mobility Index, based on survey of 82 countries regarding six specific broader socio-economic indicators by the World Economic Forum, may be considered a welcome departure from the socially disembodied one-dimensional indicator of GDP growth. The indicators it looked into are equality, employment, escape from poverty and ecological depredations. These have to be treated as inalienable features of a developing democratic country.
The market-centred ideas of employment seem to have rather limited relevance to the Indian conditions owing to the predominance of the informal sector as the main means to cater to the needs of people’s livelihood.
Instead of livelihood adequacy and security the poor are defined as employed or partly employed on the basis of their willingness to opt for more work, or efforts at scrapping a living by various means in a limited manner, often in terms of their survival level consumption of food with a given calorific value.
Nothing would be far from truth to consider the level and rate of growth of GDP/GNP as the sole, overriding indicator of India’s development
The point of such exercises seems to ensure that one may remain available for work at grossly inadequate sub-human level/ remuneration amidst surplus garnered by the rich. This way the managers of the economy may count them “above the poverty-line”! These concepts/ideas/ policies betray the basic human needs and dignity, let alone rights the Constitution so eloquently upholds.
Given the prevalent Indian reality, nothing would be far from truth to consider the level and rate of growth of GDP/GNP as the sole, overriding indicator of India’s development. In fact, it may, in some cases, turn out to be the opposite of development. 
 This is specially so with respect to the question of the four critical closely inter-connected dimensions of development ( viz, employment, equalities, exit from poverty and ecological balance). These four seem to have worsened despite (if not owing to) fairly high fluctuating rate of growth recorded by India’s GDP/GNP over the period of past over seven decades.
What has emerged is a very large, often growing but highly imbalanced economy in which the huge majority has continually to face misery and privation owing to disproportionately low access to the means of livelihood, as a small minority of plutocrats dominate the economy and polity and intensify myopic exploitation of non-renewable and renewable resources.
An even deeper malaise connected with the GDP paradigm is that in spite of the growth of the number of persons counted as ‘employed’/above poverty line, this assessment seems to be based on a particular apologetic set of ideas/standards regarding whom to consider employed or non-poor.
The content and implications of employment directly link up with equality, poverty and ecological balance seen at the ground level. In simple straight terms, growth resulting from priority provision of adequate and secure livelihoods on a reckonable scale contributes simultaneously to poverty reduction and equality. But growth without incorporating employment on a substantial scale as its principal contributor is likely to worsen the lot of the left-outs.
Dr Kabra
It is tragic indeed that right from the word go Indian policy and development establishment adopted and claims to have practiced the pursuit of accelerated economic growth by means of catching up industrialization as the principal element of the growth strategy (see the first chapter of the First Five Year Plan, 1953). 
This was based on following in the footsteps of the rich Western countries which had already by mid-1950s attained high level of GDP and world domination with near monopoly of heavily capital and energy intensive technologies, multilateral global institutions and reliance on high quality educated experts.
Later day liberalizing policy changes right up to the present day are continuation of essentially similar policies with greater freedom to the Indian and foreign big companies and their political-administrative cronies to spearhead the growth rate with hardly any positive bearing on the living conditions and livelihoods of the masses.
Today in India around 90 percent of the work force is outside the organized/formal economy. The earnings of most of the adults (except many of the owners of own-account enterprises and cultivators operating viable land holdings) engaged in it may fall short of the minimum considered essential for survival, bringing up a family and to meet the emergency needs of a rainy day. 

Infernal destitution

According to the National Account Statistics, 2020, private companies numbering a little over 11.50 lakh contributed gross output amounting nearly to Rs 1,75,96,952 crore in the year 2018-19, that is about 50.6 per cent of the nominal GDP.
Along with a disproportionately large share of the nominal GDP, the private corporate sector also commands an overwhelming proportion of the total reproducible wealth, i.e., the capital, used in the economy. Available evidence shows that it is the organized sectors which generate most of the GDP, or to which it accrues and consequently is utilized by it.
On the other end is the unorganized sector, including the overwhelming part of agriculture (around 60 percent of labour force and around 15 per cent of GDP), which provides the wherewithal for subsistence level livelihood with little marketable surplus, and produces disproportionately low portion of the total GDP of India.
The reality which is fleetingly captured by the some of the above stylized facts is grievously missed by the NSSO data on various types of ‘employment’ and 'consumption expenditure' based periodic sample survey data regarding labour use and expenditure from the respondents.
The labour market in India is a highly iniquitous buyers' market in which the choice facing most suppliers of labour is between utter deprivation and irregular work at low level of monetary reward whose real purchasing power is steadily eroded by the ‘price-giving’ component dominating the national markets. To treat this data as employment data seems to be a cruel joke.
It is rare indeed to come across analyses probing why there have been virtual riots around the recruitment camps for the military and paramilitary jobs; or, why for a handful of the low level government jobs there is an avalanche of the number of hopeful applicants; or, why huge total sums are collected by the government agencies which advertise vacancies and virtually ‘tax’ the hopefuls by way of fees for holding ‘tests’, but the process is not completed for years.
The unending search for jobs has led to the mushrooming of thousands of coaching centres and publication of reading material for these tests. Unemployment as a source of employment is an abiding irony indeed! Have our job market experts cared to look into their rationale? The simple fact is that a little over ten million Indians annually enter the labour market while only a small fraction succeeds to find an entry.
What are the cumulative implications of this hardly annual phenomenon of accumulating frustrations? Thanks to the onslaught of neoliberal ideology the freedom of the potential employers has been enhanced by granting them in advance the freedom of to ‘fire’! One wonders whether the newly acquired freedom to fire is just a Damocles’ sword to discipline the workers and job aspirants to accept whatever terms and conditions of work the employer decides to offer.
Since the test of the pudding is in the eating, the test of employment makes sense when one relates  employment to the  adequacy  and regularity of  wages, that is,  to participation in development by means  of  decent  employment. The All-India Socio-Economic Caste Census (SECC) 2011, whose rural  sector data  only have been released, is arguably the most comprehensive census based   data on the socio-economic conditions of the people ever since Independence. 
The data regarding rural India  show that  65.8 crore people belonging to about 13.34  crore households  in rural India (out of a total of nearly 88 crore rural residents) reported that  as many as about three fourths of the households belonged to the category in which  the monthly income of the highest earner in the family did not exceed  Rs 5,000. With the average  size of  the family being almost  five persons, it means that the daily money available  per person amounted to about Rs 34 at 2011-12 prices. 
At current prices the comparable figure based on the national income statistics, also covering  the urban sector, comes to  Rs 176 in nominal terms. The urban average income has lately  been  about four times the rural average. Comparable facts for the mid-1950s, as reported by BS Minhas, showed that at 1960-61  prices  an expert group of eminent persons considered  standard  private consumption of Rs 240 per person per year  at 1960 -61 prices a bare minimum. 
He estimated, based on official data, that the actual figure was Rs  200 for about  17.3 crore rural Indians. It amounted to  paisa 55 per capita per day! The 2011-12 data come indicate that per rural Indian had at least 92 paisa per person per day at 1960-61 prices.  Surely, Minhas was not exaggerating when he described this situation as one of “infernal  destitution”! 
*Professor of Economics (1980-2003), Indian Institute of Public Administration, New Delhi; Malcolm Adiseshiah Chair Professor (2010-2017), Economic Development & Decentralized Planning, Institute of Social Sciences, New Delhi
Edited for style, these are excerpts from the original paper by Dr Kabra



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