Towards a 10-trillion-Dollar Indian Economy based on the SDG agenda

This piece is part of the series, India@75: Aspirations, Ambitions, and Approaches

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The Indian development story, especially over the last three decades since economic liberalisation, has focussed on economic growth only with scant recognition of the costs of growth. While growth entailed creation of new capital through large capital expenditures, in most cases, the costs imposed on the society and natural ecosystem have been so overwhelming that they have raised questions on the efficacy of such investments! Such capital expenditures were witnessed in large-scale land-use changes for linear infrastructure, agriculture, industry, and urban settlements; dam constructions impeding over the natural hydrological flows, and the like. These have also been associated with social costs of rehabilitation or lack of rehabilitation leading to conflicts. Yet, there is no denying the critical role physical capital plays in promoting economic growth, while the empirical evidence of physical infrastructure enhancing the overall business environment and economic competitiveness at the macro-scale is also ample.

The vision of growth as the sole parameter of development has been challenged globally for over half a century, with the challenge becoming more prominent recently with development being viewed through the Sustainable Development Goals’ (SDG) lens.

However, the vision of growth as the sole parameter of development has been challenged globally for over half a century, with the challenge becoming more prominent recently with development being viewed through the Sustainable Development Goals’ (SDG) lens. To a large extent, SDGs find a theoretical underpinning in Mohan Munasinghe’s sustainomics, which talks of a transdisciplinary knowledge base combining economic, social and environmental goals. This also presents itself as reconciling between the irreconcilable trinity of equity, efficiency, and sustainability dimensions of development. Much in contrary to this global policy and academic thinking, the Indian “growth-fetishism” has led to a development paradigm that has often witnessed a compromise with the concerns of equity and distributive justice, apart from environmental sustainability. The sheer paucity of social security to provide a cushion during crisis was evidenced during the economic lockdown of 2020 in the wake of the COVID-19 pandemic, which clearly revealed the anguishes of the country’s migrant labour, the micro and small enterprises, and the poor. It was apparent that the social cushioning to the poor and vulnerable has been, so far, provided by the market forces, thereby, highlighting the failure of policy-driven distribution and equity. The lockdown was tantamount to locking down of the organic market forces, thereby, leaving the informal labour force in the lurch. On the other hand, the SDG agenda rests largely on the four forces of capital, namely, human capital (SDGs 1 – 5), physical capital (SDGs 8 and 9), natural capital (SDGs 14 and 15) and social capital (SDGs 10 and 16). UNEP’s publication on Inclusive Wealth talks of the changes in the social values of the three of these capital assets, namely, natural capital, human capital and produced or physical capital over the period from 1990 to 2014. As per this report, between 1990 and 2014, physical capital and health- and education-induced human capital grew at 3.8% and 2.1% per annum respectively globally—both at the cost of natural capital that declined at 0.7% per annum.  The report infers that the decline of forests in India is creating pressure on its ability to develop sustainably. Though the “inclusive wealth” of India increased at barely 1.6% per annum during this period driven by growth in human and physical capital, there was a decline in per capita inclusive wealth from US$368 in 1990 to US$359 in 2014 (both at 2005 prices). If inclusive wealth is taken as the factor or fundamental basis for development, then such a decline raises serious questions on the sustainability of the development process. Such a lop-sided development trajectory cannot sustain India’s path towards a US$10-trillion economy over the next 10-15 years. It needs a holistic approach.

If inclusive wealth is taken as the factor or fundamental basis for development, then such a decline raises serious questions on the sustainability of the development process.

On the other hand, following the Malthusian creed of Club of Rome’s doomsday prediction in their Limits to Growth thesis, the Catalan economists (e.g., Joan Martinez-Alier) have already been propagating degrowth as the way to look forward. Degrowth talks of deceleration or a receding wave of progression in human activities so that the very fundamental basis of life in the forms of natural capital can be sustained. This process of contraction in the economic activities in the global North by viewing development from a “beyond growth” (rather “anti-growth”) perspective is posited to create the space for a more self-defined pathway for social organisation in the global South. However, India’s development cannot be in the direction of “degrowth”. As I proposed earlier, degrowth is not merely a statement emanating from a world that has already grown, but from a world that is more equal in economic terms (income or wealth equality parameters), more equitable from the perspective of distributive justice, and where social security has helped in evolving with the welfare state. The situation in India is quite the opposite! While equity and distribution concerns still pose a challenge in this 1.3-bn+ population, a recent piece argues how increasing income and wealth inequalities can inhibit the long-term growth prospects of India, especially when consumption demand is the prime driver of growth.

Degrowth is not merely a statement emanating from a world that has already grown, but from a world that is more equal in economic terms (income or wealth equality parameters)

The US$10 trillion economy is not merely an economy with a number – it is a dream and a vision. Neither can such a dream be achieved in a non-inclusive manner, nor can this dream leave anybody behind. Amartya Sen’s essay in the wake of the pandemic-induced lockdown in India reiterated the need for equity and the distributive justice by citing how life expectancy in the UK increased during the war decades. Sen emphasised, “… The positive lessons from pursuing equity and paying greater attention to the disadvantaged helped in the emergence of what came to be known as the welfare state”. From the pandemic-induced economic pandemonium, India has to rise like a phoenix to realise the US$10-trillion economy dream. This will have to rest on two key elements: a> the simultaneous growth in health- and education-induced human capital and physical capital, without compromising the sustainability of the natural capital; and b> a more equal India serving the cause of distributive justice through reduced inequality that is posed to come in the way of long-run growth prospects. This US$10-trillion India, therefore, should present itself as a more equitable green economy based on the SDG agenda, reconciling between the irreconcilable trinity of equity, efficiency and sustainability.

• Indian Economy
• India
• Agriculture
• economic growth
• environment
• Indian Economy
• industry
• infrastructure
• SDG
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