Now for a ‘gross national happiness’ index

It’s about time we put growth in its place, to borrow a line from economist Amartya Sen. Much has been made of our “high growth” – 8% or 9% or whatever. Growth in itself cannot lead to development, which is why economists such as Sen have been making a case for “growth-mediated development”.

High growths don’t pull people out of poverty: just a handful of people in a country population, theoretically, can account for much of its GDP while millions other may be jobless, unproductive or simply impoverished.

Our governments, the one headed by Manmohan Singh and particularly the one headed by Gujarat chief minister Narendra Modi, are quite right in chasing growth, but “single-minded” pursuit of growth is unpardonable.

Bhutan, a small country, gave us a powerful idea in developmental economics when it announced a national index to measure people’s happiness, instead of measuring just growth.

India often likes to believe it could be a “super power”, but a more realistic target is to beat China first. India could even do well, for now, to match Bangladesh, a smaller neighbour with a lower per capita income, but far better human development indices.

Compared to India, fewer children die during their first five years in Bangladesh; girls stay longer in Bangladeshi schools and mothers have less chances of dying during childbirths.

Should India chase growth and leave everything else to the markets or increase focus on state-run social programmes? An acrimonious debate rages on, from university classrooms to television studios.

Last month, Alpa Shah of the London School of Economics joined Professor Akhil Gupta of the UCLA on BBC Radio 4’s “Thinking Allowed” show to discuss why India’s poverty-alleviation programmes don’t work.

Shah called on India to review the kind of economic growth it is currently pursuing, which has led to an “economic polarisation”. In other words, an ever-increasing gap between the rich and the poor.

“Rampant corruption and the state’s obsession with paperwork despite widespread illiteracy amongst India’s poorest citizens leads to the arbitrary distribution of state assistance,” Professor Gupta argues.

Last May, the government had asked the Planning Commission to update it on how far the UN’s Millennium Development Goals (MGDs) had been achieved. The MGDs are a set of eight globally agreed benchmarks to free people from extreme poverty and deprivation by 2015. The target is to reduce these by half.

The plan panel reported that, of the eight goals, none looked distinctly achievable, from health to hunger. Two sub-targets were “likely” to be met, provided efforts were sustained and four are “not on track”, while four others were found to be on course.

It said India was likely to be “close” to its poverty reduction target, despite no clarity on the official poverty line yet. Its 2009-10 poverty benchmark – Rs 32 and Rs 26 for urban and rural dwellers — was squarely criticised for being so low that few Indians would get by on it. The government had then set up a panel for a more realistic “poverty line”.

Prof. Mahendra Dev, who heads the Mumbai-based Indira Gandhi Institute of Rural Development and is on the panel to review the vexed poverty line, recently told me that India’s “income-poverty reduction” was expected to be border line (case). But if one were to include more “non-income poverty indicators”, like spending on health and education, the poverty scenario could be different.

A tight fiscal deficit target of 4.8% means welfare spending is not rising fast enough. In quite a contrast, China, revealing its budget allocations on March 5, announced raising welfare funds. Its largest percentage increase is in health-care spending, set to rise 27%, compared to a 16% increase last year. Much of it will go to rural healthcare subsidies. India’s spends a tiny 1.2% of its GDP on healthcare. Of this, the Centre spends just 0.3%.

India is also “going slow” on hunger reduction. Targets on primary education and HIV-prevalence reversal are likely to be met, but this is offset by abysmal teaching standards. The government’s annual education report of 2011 showed a majority of Class 5 pupils could not read Class 2 texts. Infant mortality reduction, though declining, is not yet an “established trend”, the plan panel said. Is the government watching?

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