Insistence of economic growth

Article by Bhushan Patil.

In India, today, economic growth is being insisted and promoted a lot. Its not only perceived but also believed that higher economic growth will bring prosperity for everyone in the country, which was clearly reflected in finance minister’s address before budget.

However we neither see it happening nor this belief seems to be backed with sufficient study/analysis. And that’s the reason China has reduced its growth target by 20%.

Inverse proportion
	Disturbing bio-diversity -> Costly growth -> economic disparity >>more When economic growth is sought at the cost of (or with negligence towards) bio-diversity, action of fighting against nature or overcoming nature’s limitations is needed. Cost of these actions augments to the cost of the growth. And that makes the growth costly and hence is affordable only for one end of the economic disparity.  For instance The vertical and concentrated growth of cities like Pune, Bangalore etc has raised costs not only of luxurious things, but also of daily livelihoods, public infrastructure services have become bottleneck and pollution has risen beyond alarming marks. We may consider the case of SEZs, for which we will not only have to lose fertile soil, but also will have to account for costs for rehabilitation of the people dependent on that soil.	A seminar on ‘Economic growth, Social equity & bio diversity’: Ecological Society arranged the seminar, in celebration of Silver Jublee year. 4 renowned personalities Madhavrao Gadgil, Yamaji Malkar, Arun Kulkarni and Prakash Gole shared their views and thoughts about What are the relations among of economic growth, social equity & bio-diversity And what are the options to bring these parameters to required & desired level.
	Loosing focus on basic needs -> Survival difficult >>more Pursuit of production of goods and services, which have more potential returns in terms of money, result in negligence towards producing basic needs of life -> making basic livelihoods rarely available and more costly and also it disturbs ecology, which has its own complications. Mr. Arun Kulkarni explained the same with a very good example of processing industry – For food processing industry special variety of crops are required, than the ones sowed for regular consumption. And as this processing industry is very rewarding, in terms of financial benefits, farmers start taking those kind of crops -> which not only disturbs fertility of the soil and nature’s cycle dependent on it, but it also disturbs the demand-supply cycle of the food crops required for regular consumptions, which is a major reason for increasing cost of livelihoods.
	Technology – substitute to nature’s mechanisms -> its side effects >>more Nature’s services are freely available today and we do not realize their importance unless its disturbed condition impacts us. So is the case of freely available air and water. Ecology has its own mechanisms to be able to purify and stabilize the balances of the natural resources. However if we disturb cycles of the ecology, we ourselves need to provide the substitute mechanisms. We have been able to do it to some extent, with the help of different advances in technology. For instance, now a day, some organizations have come up with an instrument to purify air at home. But again we not only end up spending more cost for the growth, but also usage of these technologies has its own side-effects. And in a way these efforts are in the direction of taking over the control from nature, which may have unbearable effects.
	Globalization -> competition -> automation -> unemployment >>more Increasing market pressures due to global competition, make industry to take up automation wherever possible -> this in turn make unviable for the small players to stand in the competition. Such factors result jobless growth.
	Who gets benefited -> only people with purchasing power -> Social inequity >>more Who gets benefited with such economic growth (may just be on short term basis)  - Only those people who have purchasing power. Because the markets are liberated today, market provides only those things on shelf, which have more demand (need + purchasing power). So the basic needs of the poor (poor in terms of money resource) are not supplied in sufficient amount -> making those rare hence more costly. Market competition controls cost & ensures availability of only those things, which have more demand in the market.

Does economic growth (as its called…in fact it should be appropriately termed as GDP growth) have to be inversely proportionate to social equity?

The economic growth, which is achieved today with destruction of ecological diversity, has brought social inequity because

Such impacts make the growth costly, destroy bio-diversity and reduce availability of basic needs of life -> this adds to the increasing social inequity.

Though the prime minister in his address after the budget has assured that government will ensure rise in production and availability of basic livelihood -> Against the wish to achieve social equity there are some questions, which make its realization doubtful

1. How government can ensure sufficient availability of basic livelihood & employment on one hand and liberalization of the market in this pattern of economic growth on the other? Will not putting constraints to market be required?
2. With government’s such a constraining approach, will we be able to achieve leading position in global market?

Here is the loop hole

There is a loophole, which has not allowed modern economic theories to enable growth, social equity and to restore bio-diversity at the same time.

The father of today’s modern economics ‘Adam Smith’, whose theories we also have adapted along with the whole world, had made an assumption while writing these theories. The assumption was ‘for liberal markets to work successfully (in holistic manner), the customer should be educated, having high moral values and having realization of his/her social duties’. And the assumption, which is at the base of modern economics, does not hold true, hence are its effects worldwide.

So what do we need?

Definitely as the basic assumption of Adam Smith does not hold true and if we want growth & prosperity with social equity & bio-diversity to be restored, we need to change

• either people’s attitude - take them to the level of assumption of Adam Smith
• or the economic system so that the new economic system should
• Enable prosperity, abundance at the same time ensure social equity (not equality) -> Everyone to get share of benefits, in respective amount of the efforts.
• Ensure existence for every member of the system, so as people to have choice about life’s direction
• Get rid of the constraints on the country such as debts etc, so as to enable to choose desired direction, policies for growth, in line with social equity & bio diversity
• Enable restoration of bio diversity, hence enriched life

All of us are aware that many NGOs are putting in valuable contribution to enrich lives of the people with values and principles. However apart from this if we could join (the efforts to work on individuals) with the efforts to bring desired changes to the economic system (as mentioned above), it will not only create very conducive atmosphere for the NGOs to be able to contribute more effectively but also it will prepare solid base for appropriate direction of life to bring in “economic growth, social equity & to restore bio diversity” at the same system.

So Arthakranti moment has not only analyzed and studied and current social & economic issues, but most importantly have also proposed solutions for changes in economic system. You can see that these solution proposals surely help in evolving the economic system, to meet above mentioned criteria. Please do check the Arthakranti proposal and its effects and do contribute to the efforts so that we can bring it to reality soon.