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01/03/2006:

"Infatuation with Economic Growth"

Ever since the turn of the 1990s, there has been great stress on raising the rate of economic growth. In fact, it has become the be all and end all for the governments coming to power at the centre. It has been underlined time and again that the only way to accomplish this task is by following the ten points that constitute the Washington consensus, which boil down to liberalisation, privatization and globalisation. For quite some time the votaries of this thinking and their trumpeters in the academic world as well as the media have been announcing from the housetops that the salvation of India lies in this. They blame Nehru for shackling the Indian economy and the forces of economic growth by bringing in his "disastrous socialistic ideas" and "models"! The result was, what pro-Western media and academics called "the Hindu rate of economic growth" that hovered around average 3 to 3.5 per cent per annum. Now, it is claimed that, by following the prescription of Washington consensus, India has been able to raise the annual rate of economic growth to 7-8 per cent and, very soon, it will reach 10 per cent and the day is not far when it will be ahead of China. It will then join the club of world superpowers. But here an inconvenient question arises: will it take care of India's problems of unemployment in all its forms and manifestations, illiteracy, poverty, sickness, regional economic imbalances and so on? Before we attempt to tackle this very pertinent question, let us be clear about the connotation of economic growth.

In common parlance, seldom any distinction is made between growth and development. They are generally taken to be synonyms. In development economics, however, they do not have the same connotations. Economic growth means only a sustained increase in the volume of goods and services produced annually by a nation, generally expressed in terms of GDP (Gross Domestic Product). The total volume of goods and services may increase by employing greater amounts of labour without any change in its productivity or by raising its productivity without any change or with even a decline in the quantum of labour or by increasing both the quantum of labour and its productivity. Obviously, there is a clear-cut possibility of "jobless growth", i.e., GDP may increase without generating new employment opportunities or throwing workers out of jobs.
zmag.org