Download Poor `human progress` in India - Sa-Dhan

Poor `human progress' in India
Ranabir Ray Choudhury
The Hinsdu Business Line, Nov. 13, 2006
There has hardly been any change in the `human progress'' content of
growth in the much-touted era of 7-8 per cent GDP growth rate. Not only is
India at the bottom of the heap as far as comparable large economies are
concerned, the economies below it hail mostly from under-developed Africa.
The ultimate objective of economic growth is to raise the living standard of
the people. If there is growth without such `development', that growth is
quite meaningless from the point of view of the average citizen of the
country concerned. And if the country concerned is one of the emerging
economies of the 21 st Century — as is the case with India — the subject
becomes even more interesting. After all, the central issue then becomes:
Can an economy be counted as being one of the "emerging economies" when
its "human development record" languishes at the bottom of the international
league table?
Setting records straight
But first what is this "human development record" one is talking about, and
how reliable is it? To cut a long story short, the record is provided by the
Human Development Index compiled by the UN Development Programme,
the index (in the language of the compilers) providing a "composite measure
of three dimensions of human development: Living a long and healthy life
(measured by life expectancy), being educated (measured by adult literacy
and enrolment at the primary, secondary and tertiary level), and having a
decent standard of living (measured by purchasing power parity, PPP,
income)".
To set the record straight, the index is "not in any sense a comprehensive
measure of human development. It does not, for example, include important
indicators such as respect for human rights, democracy and inequality",
spheres where India scores handsomely over a whole lot of other countries.
As the authors of the index say, "what it does provide is a broadened prism
for viewing human progress and the complex relationship between income
and well-being".
An eye-opener
In other words, what the index essentially measures is "human progress",
and it should be an eye-opener to all and sundry that India holds an
unenviable position in the comity of nations as far as this particular
parameter is concerned. The nation occupies the 126th place among 177
countries in the latest HDI ranking (2006), its corresponding position in 2005
and 2004 being 127 and 127 (among a constant of 177 countries). What this
means is that there has hardly been any change in the "human progress''
content of growth in the much-touted era of 7-8 per cent GDP growth rate.
If this is not bad enough, the country finds itself in the company of Bhutan,
Nepal and Bangladesh (among a list of seven countries, including China,
Brazil, Indonesia and Egypt) as economies where there has been minimal
change in standing since 2004.
The respective standing of the three countries in 2004, 2005 and 2006 were:
Bhutan 134, 134, 135; Nepal 140, 136, 138; and Bangladesh 138, 139 and
137. Comparable Brazil and China have done much better in terms of
"human progress", their positions over the three years being 72, 63, 69 and
94, 85, 81, the corresponding figures for Indonesia and Egypt being 111,
110, 108 and 120, 119, 111.
Not only is India at the bottom of the heap as far as comparable large
economies are concerned — countries which can be said to be in the
forefront of the growth-reorientation of the international economy — the
economies below it hail mostly from under-developed and poverty-stricken
Africa. In other words, if you leave out the African continent, India is
practically at the bottom of the table of economies in terms of "human
progress" resulting from growth, which is not something which is going to
make its citizens proud — unless, of course, the entire Human Development
Index exercise is rubbished as unacceptable, which is not quite the advisable
thing to do.
Lack of human progress
To the uninitiated, there is obviously a problem in the dichotomy of
handsome annual GDP growth rates and the lack of "human progress" as
measured by the HDI. Higher growth must lead to higher incomes, and if
income is rising there should also be an increase in the rate of progress in
the human condition. Or so would the average citizen reason. He would be
right but only if a part of the higher income went into a strengthening of the
three dimensions listed above, which form the basis of the HDI. In other
words, income distribution is as important as GDP growth if the lot of the
average citizen in any economy is to improve perceptibly over time.
The compilers of the HDI explain this phenomenon thus: "Why does income
distribution matter for poverty reduction? In a mechanical sense, the
rate of income poverty reduction in a country is a function of two things: The
rate of economic growth and the share of any increment in growth captured
by the poor.
Other things being equal, the larger the share of income captured by the
poor, the more efficient the country is in converting growth into poverty
reduction". Explaining further, the point is made that "Holding income
distribution patterns constant and projecting current growth rates into the
future, it would take three decades for the median household in poverty to
cross the poverty line in Mexico. Doubling the share of the poor in future
income growth would cut this time horizon by half. For Kenya, the time
horizon would be reduced by 17 years, from 2030 to 2013 — a transition that
would bring the country within touching distance of an otherwise
unattainable Millennium Development Goal target of halving income poverty".
Distribution matters
So in the case of India the central question is whether the 7-8 per cent GDP
growth rates over the past few years have been canalised into the
appropriate spheres as far as improving the "human progress" content of
growth is concerned. As the HDI 2006 report says, "distribution matters
because it affects the rate at which economic growth converts into poverty
reduction (the growth elasticity of poverty)".
But where does `globalisation' come into all this? There is one view which
seems to suggest that globalisation (and reforms to open up the domestic
economy to external influences) is probably responsible to some extent for
the content of "human progress" not being strengthened enough in a country
such as India. This is an interesting idea because the inference is that the
fruits of growth resulting from globalisation and internal reforms is principally
confined to private hands with the result that the distributive aspect is being
given the go-by, leading to unimpressive human development indices.
This may or may not be acceptable. But it is also a fact that the State has an
important role to play in the distribution of the fruits of growth. In the Indian
context, the question to ask is whether it has been doing its job properly
over the past decades?