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Amartya Sen: Growth and other concerns

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  • mohammad imran
    Growth and other concerns Amartya Sen While economic growth is an important boon for enhancing living conditions, its reach depends on what we do with the
    Message 1 of 1 , Feb 13, 2011
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      Growth and other concerns



      Amartya Sen



      While economic growth is an important boon for enhancing living
      conditions, its reach depends on what we do with the fruits of growth.






      – PHOTO: Ranjeet Kumar.

      Amartya Sen

      I was awakened early one morning recently by someone who said he was
      enormously enjoying my on-going debate on economic growth in India. I
      was very pleased that I had given someone some joy, but I also
      wondered what on earth he could be talking about, since I have not
      been involved in any such debate. As it happens, I am getting a steady
      stream of telephone calls and electronic communication about this
      alleged debate. Since I could not generate the memory of any such
      debate, I tried to recollect any solitary remark on economic growth in
      some other context that I might have made in the last few months. I
      managed to resurrect the memory of having said in passing, in a
      meeting of TIE (The Indus Entrepreneurs) in Delhi in December, that it
      is silly to be obsessed about overtaking China in the rate of growth
      of Gross National Product (GNP), while not comparing ourselves with
      China in other respects, like education, basic health, or life
      expectancy. Since that one-sentence remark seems to have been
      interpreted in many different ways (my attention to that fact was
      drawn by friends who are more web-oriented than I am), I guess I
      should try to explain what that remark was about.

      GNP growth can, of course, be very helpful in advancing living
      standards and in battling poverty (one would have to be quite foolish
      not to see that), but there is little case for confusing ( 1) the
      important role of economic growth as means for achieving good things,
      and ( 2) growth of inanimate objects of convenience being taken to be
      an end in itself. One does not have to “rubbish” economic growth — and
      I did not do anything like that — to recognise that it is not our
      ultimate objective, but a very useful means to achieve things that we
      ultimately value, including a better quality of life.

      Nor should my remark be taken to be a dismissal of the far-reaching
      relevance of comparing India with China. This is a good perspective in
      which to assess each of the two countries and a lot of my past work —
      on my own and jointly with Jean Dreze — has made use of that
      perspective. It is of some historical interest that comparing India
      with China has been the subject matter of discussion for a very long
      time. “Is there anyone, in the five parts of India, who does not
      admire China?” asked Yi Jing (I-Tsing, in old spelling) in the seventh
      century, on returning to China after being in India for ten years,
      studying at the ancient university in Nalanda. He went on to write a
      book, in 691 AD, about India, which presented, among other things, the
      first systematic comparative account of medical practices and health
      care in these two countries (perhaps the first such comparison between
      any two countries in the world). He investigated what China could
      learn from India, and what, in turn, India could assimilate from
      China. Comparisons of that kind — and more — remain very relevant
      today, and I have discussed elsewhere the illumination we can get from
      such comparisons in general, and in comparative medical practice and
      health care in particular (“The Art of Medicine: Learning from
      Others,” Lancet, January 15, 2011).

      What goes wrong in the current obsession with India-China comparison
      is not the relevance of comparing China with India, but the field that
      is chosen for comparison. Now that the Indian rate of economic growth
      seems to be hovering around 8 per cent per year, there is a lot of
      speculation — and breathless discourse — on whether and when India may
      catch up or surpass China's over-10 per cent growth rate. Despite the
      interest in this subject, comparable to that in the race course (the
      betting comes from the West as well as Asia), this is surely a silly
      focus. This is so not merely because there are so many elements of
      arbitrariness in any growth estimate (the choice of prices for
      weighting is only one of the problems, as any serious economist
      knows), but also because the lives that people are able to lead — what
      ultimately interest people most — are only indirectly and partially
      influenced by the rates of overall economic growth.

      Let me look at some numbers, drawing from various sources — national
      as well as international, in particular World Development Reports of
      the World Bank and Human Development Reports of the United Nations.
      Life expectancy at birth in China is 73.5 years; in India it is still
      64.4 years. Infant mortality rate is 50 per thousand in India,
      compared with just 17 in China, and the under-5 mortality rate is 66
      for Indians and 19 for the Chinese. China's adult literacy rate is 94
      per cent, compared with India's 65 per cent, and mean years of
      schooling in India is 4.4 years, compared with 7.5 years in China. In
      our effort to reverse the lack of schooling of girls, India's literacy
      rate for women between the ages of 15 and 24 has certainly risen, but
      it is still below 80 per cent, whereas in China it is 99 per cent.
      Almost half of our children are undernourished compared with a very
      tiny proportion in China. Only 66 per cent of Indian children are
      immunised with triple vaccine (DPT), as opposed to 97 per cent in
      China. Comparing ourselves with China in these really important
      matters would be a very good perspective, and they can both inspire us
      and give us illumination about what to do — and what not to do,
      particularly the glib art of doing nothing.

      Higher GNP in China has certainly helped it to reduce various
      indicators of poverty and deprivation, and to expand different aspects
      of the quality of life. So we have every reason to want to encourage
      sustainable economic growth, among the other things we can do to
      augment living standards today and in the future. Sustainable economic
      growth is a very good thing in a way that “growth mania” is not. We
      need some clarity on why we are doing what (including the values we
      have about our lives and freedoms and about the environment), and
      getting excited about the horse race on GNP growth with China is not a
      good way of achieving that clarity.

      Further, we have to take note of the fact that GNP per capita is not
      invariably a good predictor of valuable features of our lives, for
      they depend also on other things that we do — or fail to do. Compare
      India with Bangladesh, where, as Jean Dreze pointed out in an article
      many years ago, “social indicators” are “improving quite
      rapidly” (“Bangladesh Shows the Way,” The Hindu, September 17, 2004).
      In terms of income, India has a huge lead over Bangladesh, with a GNP
      per capita of Rs.3,250, compared with Rs.1,550 in Bangladesh, in
      comparable units of purchasing power parity. India was ahead of
      Bangladesh earlier as well, but thanks to fast economic growth in
      recent years, India's per-capita income is now comfortably more than
      double that of Bangladesh. How well is India's income advantage
      reflected in our lead in those things that really matter? I fear not
      very well — indeed not well at all.

      Life expectancy in Bangladesh is 66.9 years compared with India's
      64.4. The proportion of underweight children in Bangladesh (41.3 per
      cent) is a little lower than in India (43.5), and its fertility rate
      (2.3) is also lower than India's (2.7). Mean years of schooling amount
      to 4.8 years in Bangladesh compared with India's 4.4 years. While
      India is ahead of Bangladesh in male literacy rate in the youthful age-
      group of 15-24, the female rate in Bangladesh is higher than in India.
      Interestingly, the female literacy rate among young Bangladeshis is
      actually higher than the male rate, whereas young females still do
      much worse than young males in India. There is much evidence to
      suggest that Bangladesh's current progress has much to do with the
      role that liberated Bangladeshi women are beginning to play in the
      country.

      What about health, which interests every human being as much as
      anything else? Under-5 mortality rate is 66 in India compared with 52
      in Bangladesh. In infant mortality, Bangladesh has a similar
      advantage, since the rate is 50 in India and 41 in Bangladesh. Whereas
      94 per cent of Bangladeshi children are immunised with DPT vaccine,
      only 66 per cent of Indian children are. In each of these respects,
      Bangladesh does better than India, despite having less than half of
      India's per-capita income.

      This should not, however, be interpreted to entail that Bangladesh's
      living conditions will not benefit from higher economic growth — they
      certainly can benefit greatly, particularly if growth is used as a
      means of doing good things, rather than treating it as an end in
      itself. It is to the huge credit of Bangladesh that despite the
      adversity of low income it has been able to do so much so quickly, in
      which the activism of the NGOs as well as public policies have played
      their parts. But higher income, including larger public resources,
      will enhance, rather than reduce, Bangladesh's ability to do good
      things for its people.

      One of the great things about economic growth is that it generates
      resources for the government to spend according to its priorities. In
      fact, public resources typically grow faster than the GNP: when the
      GNP increases at 7 to 9 per cent, public revenue tends to expand at
      rates between 9 and 12 per cent. The gross tax revenue, for example,
      of the Government of India now is more than four times what it was in
      1990-91, at constant prices — a bigger rise than GNP per head.

      Expenditure on what is somewhat misleadingly called the “social
      sector” (health, education, nutrition, etc) has certainly gone up in
      India, and that is a reason for cheer. And yet we are still well
      behind China in many of these fields. For example, government
      expenditure on health care in China is nearly five times that in
      India. China does, of course, have a higher per-capita income than we
      do, but even in relative terms, while China spends nearly two per cent
      of its Gross Domestic Product (GDP) on health care (1.9 per cent to be
      exact), the proportion is only a little above one per cent (1.1 per
      cent) in India.

      One result of the relatively low allocation to public health care in
      India is the development of a remarkable reliance of many poor people
      across the country on private doctors, many of whom have little
      medical training, if any. Since health is also a typical case of
      “asymmetric information,” with the patients knowing very little about
      what the doctors (or “supposed doctors”) are giving them, the
      possibility of fraud and deceit is very large. In a study conducted by
      the Pratichi Trust, we found cases of exploitation of the poor
      patients' ignorance of what they are being given to make them part
      with badly needed money to get treatment that they do not often get
      (we even found cases in which patients with malaria were charged
      comparatively large sums of money for being given saline injections).
      There is very definitive evidence of a combination of quackery and
      crookery in the premature privatisation of basic health care. This is
      the result not only of shameful exploitation, but ultimately of the
      sheer unavailability of public health care in many localities around
      India.

      The central point to seize is that while economic growth is an
      important boon for enhancing living conditions, its reach depends
      greatly on what we do with the fruits of growth. To be sure, there are
      large numbers of people for whom growth alone does just fine, since
      they are already privileged and need no social assistance. Economic
      growth only adds to their economic and social opportunities. Those
      gains are, of course, good, and there is nothing wrong in celebrating
      their better lives through economic growth, especially since this
      group of relatively privileged Indians is quite large in absolute
      numbers. But the exaggerated concentration on their lives, which the
      media tend often to display, gives an incomplete picture of what is
      happening to Indians in general.

      And perhaps more worryingly, this group of relatively privileged and
      increasingly prosperous Indians can easily fall for the temptation to
      treat economic growth as an end in itself, for it serves directly as
      the means of their opulence and improving lifestyles without further
      social efforts. The insularity that this limited perspective generates
      can even take the form of ridiculing social activists — “ jholawalas”
      is one description I have frequently heard — who keep reminding others
      about the predicament of the larger masses of people who make up this
      great country. The fact is, however, that India cannot be seen as
      doing splendidly if a great many Indians — sometimes most Indians —
      are having very little improvement in their deprived lives.

      Some critics of huge social inequalities might be upset that there is
      something rather uncouth and crude in the self-centred lives and
      inward-looking temptations of the prosperous inner sanctum. My main
      concern, however, is that those temptations may prevent the country
      from doing the wonderful things it can do for Indians at large.
      Economic growth, properly supplemented, can be a huge contributor to
      making things better for people, and it is extremely important to
      understand the relevance and role of growth with clarity.

      (Amartya Sen, who won the Nobel Prize in Economics in 1998 and was
      awarded the Bharat Ratna in 1999, is Professor of Economics and
      Philosophy at Harvard University. He is Founder and Chair of the
      Pratichi Trust, which he started with his Nobel money.)
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