He is an environment minister constantly in hot water, and perhaps this should be part of the job description. With Adarsh and the Mumbai airport, with Posco and Vedanta, his environmental axe is constantly making headlines. Often, his ministry?s decisions look arbitrary, or plain flaky or endangering the India growth story, which is, of course, the most damaging criticism. Now he has begun talking about green national accounting, as an alternative to GDP! What?s wrong with the GDP measurement? Why not focus on increasing it instead of muddying it? Surely, changing the way India measures progress can wait till it has some more of it in the bag? But an environment minister should, by definition, be future-oriented because we won?t have a sustainable future if we don?t toss around visionary ideas in the present. An environment minister, therefore, needn?t make us comfortable but he does need to be convincing.
Jairam Ramesh was very convincing when he gave the convocation address at the Tata Institute of Social Sciences this month, where he built a strong case for considering the limits of growth: ?We do ourselves no favour if we don?t even try to pose the limits to growth question from an ecological perspective and then try to assess what the 9%-plus growth means for our water resources, our forest wealth and indeed for our entire and very variegated and rich biodiversity.?
Note that he didn?t say, let?s ditch the GDP growth rate yardstick. He acknowledged its criticality as an instrument for creating jobs, plus creating the revenues for government to invest in infrastructure and the likes of the world?s largest social safety net programme. He underlined this statistic?s compound effect, where an economy growing at 9% per year doubles in roughly 8 years and quadruples in 16 years. As a contrarian example, Ramesh also pointed to World Bank data showing that India?s Gross National Savings were around 34.3% of GDP in 2008, but its Adjusted Net Saving in the same year were 24.2%, ?the difference arising due to the depletion of natural resources and pollution related damages, in addition to conventionally measured depreciation of the nation?s capital assets?. Plus, on current trends, India will run out of coal in 45 years. What then? If green accounting forces us to look at tomorrow?s ecological crises in the face today, policymakers will be persuaded onto a more sustainable growth path, in terms of innovations in both technology and practices. This is a convincing argument. Green GDP will complement GDP. We are not talking black or white, but blue and green.
In looking to the future, there are lessons to be learnt from the past. It wasn?t overnight that GDP became the grandaddy of all statistics?the one ring to rule them all, so to speak.
This happened over long decades since the second World War and the Great Depression, when troubled economic times drove the search for a standard means to track production capacity?of individuals, companies and the government. In 1937, Simon Kuznets presented a GDP formulation to the US Congress. In 1944, the Bretton Woods conference accepted it as a standard measure for national economies. In 1978, a group of economists compiled GDP per capita data for more than 100 countries. There were doubts about the concept?s coverage from the very beginning, with Kuznets himself acknowledging that ?the welfare of a nation can … scarcely be inferred from a measure of national income?.
It was such doubts that led the UN to launch the Human Development Index (combining GDP with health and education indicators) in 1990. Amartya Sen helped. He helped again 19 years later, when French President Nicolas Sarkozy tasked a commission to come up with a measure that goes beyond GDP, accounting for factors like economic inequality and environmental impact. The US commerce department had actually tasked a system of environmental accounts back when the Human Development Index was first being introduced. But the task-force never got traction, and the Europeans have obviously taken a lead on this agenda now. China had also dabbled in these waters in 2006, when it announced a new index for a Green GDP, whereby the costs of natural resources depletion and environmental degradation would be accounted for to assess growth with greater economic rigour. But when Chinese officials started computing the costs of polluted land, rivers and skies, growth figures dropped so drastically?close to zero in some provinces?that the entire exercise collapsed by the time the world went into a financial meltdown. But such is the circle of life that it was precisely this meltdown that gave green accounting a new breath, just as the World War had brought GDP to life.
On the upside for India, as Ramesh said in his convocation address, ?We are a late-comer to the sustained high GDP growth rate club and being a late-comer means you don?t have to necessarily repeat the horrendous mistakes others have made.?
renuka.bisht@expressindia.com