A $5 trillion economy for India: At what cost?

PM Narendra Modi wants India to be a “$5 trillion economy” by 2024. The consequences of such high GDP growth –even setting aside questions regarding its distribution or true worth– will result in depriving the dispossessed sections of society of access even to natural resources, while driving fragile ecologies to a point of no return.

Growing GDP Amid Hazardous Pollution – The True Welfare of our Communities?

Shankar Sharma, The Citizen

Addressing chief ministers of the states in July 2019, Prime Minister Narendra Modi was reported as having said that he wanted India to be a “$5 trillion economy” by 2024. This means roughly doubling of the size of our economy in 5 years.

As a part of the efforts to accelerate the economic activities of the nation, the union government announced in February 2018 its decision to set up 12 additional nuclear power reactors. Also being planned and constructed are many coal based and dam based power plants to support the energy demands of such accelerated economic activity.

The country has also embarked on having a total capacity of 175,000 MW of renewable energy by 2022. These are all a part of the “ease of doing business” environment, and “making India global hub of manufacturing” in addition to massive number of investments in setting up roads, railways, dams, industries, airports etc.

When we note the official statements that the country has a surplus power generating capacity which will last several years, and that it is looking for opportunities to export electricity, there seems an urgent need to review the high GDP growth rate paradigm keeping in mind the all-round welfare needs of our society.

Successive governments in the country have been focusing on a high GDP growth rate since the 1990s, supposedly as the road map to eliminate poverty. After decades of such a focus, what is the experience of society as a whole? Is such high growth year after year desirable, is it truly in the interest of our communities?

Very often the issues of ‘economic development’ and ‘environment’ are wrongly pitted against each other. Since everything we see around us is provided by nature, the necessity of harnessing natural resources on a sustainable basis need not be emphasised.

The frenetic growth in non-agricultural sectors, as is happening in many states of our union, may lead to instability (directly and indirectly) in the production and productivity of food and other agricultural products. Such a probability of lowered agricultural output in the context of a huge and growing population should be a matter of matter of grave concern to our country.

There are also genuine concerns among environmentalists, that the policy of high business growth at any cost is seriously compromising the environment, as evidenced by the deteriorating environment all over the world. Serious concerns on the pollution of air, water and soil, as has been reported from different parts of the country, cannot be ignored any longer. The fact that global warming is clearly associated with a huge and deleterious impact on food production should make this issue of even greater concern.

In this context, the primary question should be whether the PM’s stated doubling of the “wealth” of society – without regard to its distribution or true worth – in a decade should come at a huge cost to large sections of our society. How much are such societal costs acceptable, and who gets to decide?

Under the kind of “economy” we have at present, a sustained high GDP growth rate will mean:

The setting up of more factories or manufacturing facilities; consumption of large quantities of raw materials such as iron, steel, cement, chemicals etc.; increasing an unsustainable demand for natural resources such as land, water, minerals, timber etc.; acute pressure from businesses on the government to divert agricultural or forest lands; huge demand for various forms of energy (petroleum products, coal, electricity etc.); accelerated urban migration; a clamour for more of airports, airlines, hotels, shopping malls, private vehicles, express highways etc.

A vast increase in each of these activities, while increasing the total greenhouse gas (GHG, responsible for global warming) emissions, will also reduce the overall ability of natural carbon sinks such as forests to absorb these emissions. There will also be increased pollution of land, air and water, along with huge issues of managing the solid, liquid and gaseous wastes.

The government’s own draft National Resource Efficiency Policy, 2019 points out many concerns in India:

– High import dependency of many critical raw materials

– 30% of land undergoing degradation

– Highest water withdrawal globally for agriculture

– 3rd highest CO2 emitter, responsible for 6.9% of global CO2 emissions

– Much lower recycling rate at 20-25% compared to 70% in developed countries

– Low material productivity compared to global average

– 3rd largest material demand (in 2010)

– Resource extraction of 1,580 tonnes/acre much higher than the world average of 450 tonnes/acre.

The assumption that the country needs to sustain economic growth of 8-9 % over the next 20 years to eradicate poverty and to meet its human development goals, will lead to very many intractable problems for the society from social and environmental perspectives.

Besides, such a simple correlation between income and human development, without concerted state intervention to improve the latter, is rarely in evidence.

Such a high growth rate has never been found necessary in developed economies, where even at the highest growth period they are reported to have registered only 3-4 % growth. The so called “trickle down” benefits to vulnerable sections of our society through 8-9 % growth will be negligible as compared to the all-round benefits associated with equitable growth at a greatly reduced rate, 3-4%, if we harness our natural resources responsibly.

The consequential social and environmental impacts of high GDP growth rate in China, Indonesia, Malaysia, Bolivia etc. for many years continuously should establish that the concerns are similar everywhere, whereas the poverty has not been eliminated fully.

The Club of Rome had raised considerable public attention in this regard way back in 1972 with its report ‘The Limits to Growth’. It had predicted that economic growth could not continue indefinitely because of the limited availability of natural resources, particularly oil. A 2011 study of those predictions found that “the warnings we received in 1972… are becoming increasingly more worrisome as reality seems to be following closely the curves that the… scenario had generated.”

We in India should keep in mind that air pollution here is so bad that it kills about half a million people every year.

And despite a high GDP growth rate since 1996, about 30% of the population in the country are still reportedly living below international poverty lines.

The consequences of high GDP growth will result in depriving the dispossessed sections of society of access even to natural resources (such as forests, rivers and fertile land), while driving fragile ecologies to a point of no return.

Already a joint study by the World Bank and University of Washington released in 2016 has estimated that in 2013 the environmental degradation costs to India, including welfare costs and lost labour income due to air pollution, was of about 8.5 % of its economy.

These World Bank estimates may indicate that net growth in our economy is probably negative when we take the environmental degradation and health costs into objective consideration.

In this context, how advisable is it to plan to double the size of our economy in the next 5 years?

As far back as 1974, the Cocoyoc Declaration in Mexico had unequivocally stated the criticality to limit our needs within the nature’s limits. Organised by UNEP and the United Nations Commission on Trade and Development, this symposium identified the economic and social factors which lead to environmental deterioration:

“The combined destructive impacts of a poor majority struggling to stay alive and an affluent minority consuming most of the world’s resources are undermining the very means by which all people can survive and flourish.”

“We are all in need of a redefinition of our goals, or new development strategies, or new lifestyles, including more modest patterns of consumption among the rich.”

Should we not focus instead on those economic activities which will not lead to further diversion of forest/agricultural lands, which will not demand much of water and energy, which will not lead to pollution of land, air and water, and which will lead to sustainable harnessing of our natural resources? Such activities may include sustainable agriculture, horticulture and animal husbandry, forestry, health and educational services, IT&BT, eco & health tourism etc.

In this context it is pertinent to know what Tamil Nadu State Action Plan on Climate Change (TNSAPCC) has said: “Global development experience reveals that one percent growth in agriculture [and allied activities] is at least two or three times more effective in reducing poverty than the type of same growth emanating from non-agricultural sector.”

Can we hope that the tall claims by the government on the issue of climate change and on economic growth will be matched by an effective action plan to minimise the pollution and contamination issues of our communities, by urgently moving away from the high GDP growth rate paradigm?

Shankar Sharma is a power policy analyst.


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