India Needs Inclusive Wealth

Growth fetishism, a phenomenon that views GDP growth as the ultimate measure of economic progress, has characterised the development paradigm of the global South. The BRICS nations, including India, epitomise this vision. From a paradigmatic perspective, this vision is reductionist, to say the least—the complex multidimensional notion of development is reduced to a single numerical variable. Such unbridled, mindless pursuit of growth often blurs the costs of growth, namely, accelerating climate change, deepening inequality, and a degrading ecosystem.

India needs physical capital expansion to promote private investment, given that its past growth has largely been driven by private consumption.

Climate change is not fundamentally an environmental problem, but a developmental one. It emerges from the systemic failure to factor in the environmental and social costs of unbridled growth. And yet, in the aftermath of the Covid-19 pandemic, most recovery strategies in the Global South have reinforced the same old blueprint: high capital expenditure, infrastructure expansion, and resource-intensive urbanisation. India, for instance, increased its capital expenditure outlay by over 35% in the immediate post-pandemic year 2022–23 compared to pre-pandemic levels. It is not that such expansions are not needed. India needs physical capital expansion to promote private investment, given that its past growth has largely been driven by private consumption. But such investments often come at the cost of natural ecosystems—forests, wetlands, and grasslands.

This paradox is stark: while nations pledge net-zero emissions and accelerate the transition to renewables, they simultaneously clear vast tracts of land that act as carbon sinks for construction and industrial expansion. Such ecosystem destruction undermines the very climate mitigation efforts those transitions seek to support.

The reductionist definition of “Green Transition” as a shift from fossil fuels to renewable energy ignores the fact that lifestyle choices, consumption patterns, and land-use practices are equally crucial in determining the success of any climate strategy. Green growth—often presented as a win-win for the economy and ecology—assumes that GDP can be decoupled from natural resource use. However, studies like those by Ward and colleagues in 2016 confirm that such decoupling is neither empirically substantiated nor economically sustainable in the long term.

Green growth—often presented as a win-win for the economy and ecology—assumes that GDP can be decoupled from natural resource use.

Given this, Prime Minister Narendra Modi’s call for a global mass movement through LiFE—Lifestyle for the Environment—at COP26 in Glasgow seemed to provide an alternate development pathway. It calls for sustainable lifestyles rooted in responsible consumption, ecological mindfulness, and alignment with nature’s regenerative capacities. In the process, LiFE intersects with all the Sustainable Development Goals (SDGs). The approach does not discard growth ambitions; rather, it asks nations and individuals alike to realign their paths to progress in harmony with nature.

Many would identify LiFE with the occidental degrowth philosophy, though they are fundamentally different. Degrowth advocates a deliberate slowdown of economic activity, emphasising ecological balance, social justice, and redistribution. Though it resonates with LiFE’s emphasis on reconfiguring our metabolic relationship with nature, it is more radical in tone and scope from the perspective of advocating retraction from the present ways of living.

Degrowth often overlooks the socio-economic realities of the Global South. In regions where poverty, informality, and underdevelopment persist, a hard shift to degrowth without systemic safety nets could be destabilising, as evidenced by Sri Lanka. In such contexts, LiFE allows each country and community to define their paths, provided they align their lifestyles with ecological limits.

All three paradigms—SDGs, LiFE, and degrowth—converge on a critical idea: the need to conserve biodiversity, protect natural ecosystems, and transition to renewable energy.

LiFE accommodates aspirations and diversity of pathways, suggesting a more inclusive and less doctrinaire framework.

Yet degrowth rejects the very notion of “sustainable development,” arguing that any pursuit of economic growth, even when paired with conservation, remains fundamentally flawed. In contrast, LiFE accommodates aspirations and diversity of pathways, suggesting a more inclusive and less doctrinaire framework.

India’s challenge, therefore, is not to choose between growth and degrowth, but to transcend this binary altogether. India must define a developmental pathway that acknowledges its need to grow to achieve its Viksit Bharat by 2047 goal, but not in the business-as-usual mode through natural capital degradation and widening inequality.

The philosophy of inclusive wealth needs to be embraced at a more micro-level, including the corporate sector. These four forms of capital are embedded in the various delineations of sustainability, including the SDGs. Empirical analysis shows that firms with better compliance with ESG parameters have revealed better bottom lines as compared to others.

India also needs to strengthen its climate adaptation financing, a sector largely ignored by financial institutions. This will require creating a market for adaptation with a properly exhibited RoI for adaptation projects for the financial institutions, mandating a substantial portion of the CSR expenditures to get into adaptation financing, and tapping philanthropic financing.

In other words, India’s climate-resilient development architecture needs growth strategies and an aggressive push to reduce income and social inequality.

This commentary originally appeared in Business Today.

• Indian Economy
• India
• climate adaptation
• degrowth
• ecosystem conservation
• ESG compliance
• GDP growth critique
• Global South
• green transition
• inclusive growth
• LiFE initiative
• sustainable development

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