Often, one links a country’s GDP growth and the growth of the manufacturing industry with the improvement of the overall well-being of its people.
After the opening up of the economy, which significantly contributed to the rise of the middle class, there is this euphoric feeling that economic growth is the ultimate panacea for India’s problems.
India entered the rapid economic development phase only about two decades ago when the country adopted economic reform measures. Opening up of the economy was an inflexion point that witnessed a major shift from the command-and-control or centrally planned economic policies followed by India until then. Since then, the country has posted robust economic growth, especially between 2003 and 2010.
According to a recent World Bank Report, India has displaced Japan to emerge as the world’s third largest economy in terms of purchasing power parity (PPP). The fact that the country has moved up from tenth place in 2005 to third place in 2011 shows that we have made some progress on the economic front.
A recent Boston Consulting Group report ‘Riding a Wave of Growth: Global Wealth 2014’ and the New World Wealth report highlight that India is emerging as the home of millionaires and multimillionaires. According to the New World Wealth report, India has the eighth largest group of super-rich people in the world.
The country’s relatively faster economic growth in recent years isamong the reasons for the increasing number of super-rich. Yet, India with a low per capita income figures among the low middle income group countries, signifying the widening wealth gap between the haves and the have-nots. It is time for the country to analyse this situation and evaluate strategies that would help its people achieve inclusive economic growth and well-being. According to a World Bank report, India accounts for a third of the world’s poor (up from 22 per cent in 1981) with China coming next contributing 13 per cent (down from 43 per cent in 1981).
UNDP’s report on human development places ranks India at the 135th position on the basis of key social indicators such as access to education, standard of living, and gross national income per capita on purchase power parity and such others. Even countries such as Iraq, Palestine, Egypt, Sri Lanka, Indonesia, and Vietnam fare better in the rankings.
McKinsey’s study finds that close to 680 million Indians lack the means to meet essential needs. It is clear that the almost exclusive emphasis on economic growth will not automatically result in either uplifting quality of life or ensuring equal growth opportunities for all.
The present economic growth model will only further widen the gap between the empowered rich and the vast impoverished majority. The less empowered, because of lack of opportunities to be equal partners, will continue to languish. True, in any economic growth model, there will be a trickledown effect to the less empowered, though that will come only with widening economic disparity. Real enablement is not to be confused with doling out freebies. It is empowering people to be equal partners and stakeholders in the raising economic prosperity.
This begins by empowering them to meet their essential needs, which in turn, will set in motion the virtuous cycle of wealth creation and consumption. Greater emphasis on empowerment, which includes better and affordable access to bare necessities such as education, social security, food, housing, drinking water, sanitation, healthcare, and energy will spur economic activities that ultimately contributes to economic growth.
One has to bear in mind that empowerment also results in the creation of not only tangible, physical, and financial assets, but intangible ones such as human assets as well. Making education accessible and imparting skills entails building schools, colleges, and vocation training facilities and more importantly, human capital. Building infrastructure involves creation of not only demand for cement, steel, and other construction material, but also non-agricultural jobs, which presently are the least productive. According to the information released by the Ministry of Statistics and Program Implementation recently based on a national survey, the percentage of households, which have drinking water facilities within the premises, is around 46 per cent in rural India and 76 per cent in urban India. The situation relating to sanitation is far grimmer.
This shows the immense scope that India offers for investments to improve access to water, healthcare, and sanitation, which are basic requirements for healthy living. Such investments will also have a strong multiplier effect both in the near and the long term.
(The author is an independent industry analyst and business consultant)
