Search for an Alternative Model Of

7/30/2019 Search for an Alternative Model Of

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SEARCH FOR AN ALTERNATIVE MODEL OF

DEVELOPMENT

DR.ALOK VERMA, ASSISTANT PROFESSOR, DEPARTMENT

OF POLITICAL SCIENCE, RAJENDRA COLLEGE,

J.P.UNIVERSITY, CHAPRA

AND

DR.RANJEET KUMAR, ASSISTANT PROFESSOR,

DEPARTMENT OF POLITICAL SCIENCE, J.P.UNIVERSITY,

CHAPRA

Recently there has been a spate of literature on economic growth, and some scintillating andsober reports, treatises and articles have appeared in the press on this topic. Eminent experts andeconomists like Michael Spence (Nobel Laureate), Montek Singh Ahluwalia, Arvind Pangariha,Arvind Subramanian, Arvind Virmani, Jeffrey D. Sachs, Dani Rodrik, Shankar Acharya, to nameonly a few, have contributed their views on various developmental issues. Eleventh Five Year

Plan, 2007-2012, published by the Planning Commission, Govt. of India, has highlighted theobjective of 'Fast Growth and Inclusive Growth' to be achieved in the next phase of planning in

India. Here it is necessary to emphasise that the goal of 'Inclusive Growth' is laudable, because ittries to reduce the gap between the 'haves' and the 'have-nots', between the rich and the poor,between the urban and the rural areas, between per capita earnings from agriculture and othereconomic sectors, between SC, ST, OBCs and other communities in the society, between theliterates and the illiterates, between men and women, between traditional and moderntechnologies, and so on and so forth. These gaps are not only irritants in society, but they giverise to conflicts, which at times create law and order problems in the smooth functioning of thedemocratic polity and beyond a point become quite unmanageable also. Therefore, now theemphasis has shifted towards sustainable development as the final goal of development, because

it caters to the needs of the present generation as well as the future generation. Therefore, it isregarded as the necessary desideration for a more safer and more secure world. But we shall seelater on that for achieving the goal of sustained growth, we need sustainability not only in the

economic sphere, but also in political, environmental, energy and other spheres, that affect oureveryday life and our human behaviour in its totality.


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Development Experience of Countries Differ Widely:

It is interesting to note that over a long period the growth rates have differed widely amongvarious developing countries. Following table indicates the per capita GDP in 2004-06 as a ratioof per capita GDP in 1960-62, in 2000 US $ terms. At both the ends, the average for three years

has been taken for more valid comparisons:

China 17.12

Botswana 17.02

South Korea 11.83

India 3.22

Pakistan 3.15

Bangladesh 1.65

Saudi Arabia 1.40

Kuwait 0.20

(Source: Macroscan, article by C.P. Chandrasekhar & Jayati Ghosh, in Business Line, August12, 2008, p.9)

The table indicates that over a period of 46 years, per capita real income of China increased byabout 17 times, while that of India by about 3 times, and that of Kuwait declined to a level of 1/5of its initial level. Thus, some countries grew faster, while others grew at a moderate rate, andsome countries even stagnated, or even declined in terms of growth-performance. Thus, thesustained growth and high growth is an exception, rather than the rule. Saudi Arabia experienced

a sharp decline in its per capita GDP from the early 1980s, but could not reach the earlier levelsby 2006, despite the rise in oil prices in the later period.

Such substantial differences in growth rates in different countries lead us to examine the basic

causes for this phenomenon, so that steps may be initiated by the laggards to speed up their'catching-up' process. Growth process in different countries is very much influenced by their

initial stages of development, natural resources, technological capabilities, their developmentalefforts and governance standards, etc. Here we must remember that Growth is not everything,but it is the foundation for everything. It won't be an exaggeration to say that, other thingsremaining the same, high growth is a necessary condition for inclusive growth, and later forsustainable growth - and for making frontal, firm, and even full attack on problems of poverty,

unemployment, disease, illiteracy, ignorance and backwardness in developing countries

From Dirigiste Regime to Neo-Liberal Regime for Development:

Prior to the wave of liberalization across the world (the cut-off point may be taken from 1979,when China decided to walk on the road of economic liberalisation), the doctrine of communism,and its milder version of socialism, had a great appeal for economic transformation in countrieslike Soviet Union, and some countries of Eastern Europe such as Hungary, Poland, Eastern


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Germany, Bulgaria, Romania, etc. Dirigiste Regime was liked, because it was believed that total

state control over economic and social decisions could alone maximize the welfare of the people.The tilt towards 'socialist pattern of society in India' during Nehruvian period was largelyinfluenced by Soviet experiences in this regard. China and Cuba also followed 'Statism' for quitesometime in their economic domain. But, gradually the interest towards state control and state

domination started withering and waning, and the era of Adam Smith ushered in, whichemphasized that human beings are rational self-interested beings, and they take decisions tomaximize their individual gains, which also benefit the entire society. Country after countrystarted adopting economic liberalization in their pursuit of accelerating economic growth. It is

important to note that Soviet Union and China also opted for 'market socialist economy' as theirnew ideal; while emerging market economies like India, after being fed up with 'Licence, Permit,

Quota (LPQ) Raj.' under the so-called socialist brand Regime, adopted the Neo-liberal EconomicPolicy of 'Liberalisation, Privatisation and Globalisation' (LPG) from 1991; when Indian

Economy was practically in ICU, facing deep economic crisis, due to acute shortage of foreignexchange reserves and continuous spiralling prices, along with deficits in trade and fiscalspheres.

ESSENTIALS OF SUSTAINABLE DEVELOPMENT

We have seen earlier that neo-liberal policy of globalization has some shortcomings andmoreover, it does not bring gains for everyone. In fact, it gives more benefits to those countries,which restructure their economies internally on more efficient and competitive lines, such asChina and several newly industrializing countries. It has been felt that Countries like India havesuffered from the so called 'Dutch Disease' by opening their economies under globalization andliberalization. For example, with greater inflow of foreign capital in India, there was an upsurgein our Forex Reserves in the recent past, but it led to exchange rate appreciation of the Indianrupee in terms of dollars, and thereby, hit the exports of our traditional items, like gems and

jewellery, textiles, handicrafts, leather products, etc. Thus, there was one benefit, but at the costof another loss. It was not a win-win situation. Moreover, even advanced and mature industrial

economies like USA also suffered from sub-prime mortgage crisis, which created globalturbulence in the capital markets around the world. Therefore, there is a renewed search for somedurable solution for the ills of developing and developed economies, and in this pursuit theconcept of 'Sustainable Development' has caught the imagination and attention of academia,planners and various thinkers in the world.

The World Commission on Environment and Development, popularly known as Brundtland

Commission, 1987, (as mentioned earlier also) defined Sustainable Development as'development that can meet the needs of the present generation without compromising the ability

of future generations to meet their own needs.

Thus, sustainable development ensures inter-generational equity in development. The presentgeneration is not allowed to meet its needs at the cost of the future generation. It is not a zero-sum game, rather it is a positive-sum game. The interests of both generations are duly taken careof. The U.N. has promulgated a new term for sustainability. The Triple Bottom Line (TBL) orPeople, Planet, Profit, which in essence, represents three aspects of development, namely, social,
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environmental and economic. Thus, Sustainable Development represents this trinity, viz; social

development, environmental development and economic development. By integrateddevelopment on these three fronts, we can ensure peace and prosperity, safety and security of theentire world and achieve balanced development for all the countries. In more simple words, wecan say that sustained growth is said to have been achieved when poverty is eradicated (social

aspect), when environment is preserved (deforestation is followed by afforestation, exploitationand utilization of natural resources (like land, water, minerals, forests, etc.) is followed by thesimultaneous and systematic regeneration and restoration of the same, and finally, wheneconomy goes on profitable lines on the basis of efficiency, competition, modernisation and

technological advancement in all sectors of the economy. Thus, sustainability has its competitivecontours, but the concept, though simple in appearance, is quite complex in attaining it, because

it engulfs the entire gamut of social transformation, environmental preservation and economicchange, which though attainable, yet a challenging one.

Now, to proceed towards 'Triple Bottom Line' to attain the goal of sustained growth, we need to

adopt three E's, i.e. 'Efficiency' (for profit line), 'Equity' (for people or social sector) and

'Environment' (for planet preservation/conservation). But in the light of the developmentexperience of several countries in the world, we need support from some more E's; such asEntrepreneurship, Employment, Entertainment (Dance, music, painting, laughter etc.) - (aplethora of the same on TV channels these days in India), Empowerment of women and weakersections of society and Enforcement of the accepted laws and decisions in letter and spirit. Whenvigorous efforts are made to adopt these E's and implement policies based on them, we are ableto have total socio-economic transformation in a country. The necessary detailed roadmap needs

to be prepared in this regard for each individual country based on its culture, stage of economicdevelopment, polity and aspirations of its people. The entire exercise must be based on serenity

and sobriety and high cultural and ethical behaviour.

SUSTAINED GROWTH POSSIBLE ONLY THROUGH HOLISTIC APPROACH

As sustainable development encompasses not only economic aspect, but also social andenvironmental aspects, we have to develop a new systemic or holistic approach towardseconomics to understand the complex human realities. Economists, so far, have adopted a narrow

approach, which may be called a 'reductionist approach' to analyse economic issues. In theirequations, they include some measurable variables like income, savings, investments, ICOR, etc.

and on the basis of some simple assumptions about a particular phenomenon, arrive at sometentative conclusions or results. But they fail to include some 'soft' forces in their analysis, more

particularly those related with other sciences such as social and political disciplines and humanbehaviour. Moreover, some immeasurable forces like ethical and emotional behaviour, social

discipline, honesty, humility, charity, compassion, etc. are normally beyond their purview. That'swhy, their perspectives are narrow in most of the cases. Economists, political scientists,historians, sociologists and those belonging to physical sciences, normally do not talk to eachother, in fact, they do not need to talk to each other in the normal course. Religious leaders alsoconcentrate on their preaching and teachings related with their particular faiths, and do not relatethem with the day to day socio-economic problems of the people and their solutions. Under these
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circumstances, they are not able to grapple with the problems in a meaningful sense. Thus, they

are far removed from enlightened judgement and realistic solutions of human problems

A few examples, are given below to indicate that 'sustainable development' can be attained

by fulfilling the following conditions only:

1. Fractured and frictional multi-party politics and ever-changing parties in coalitiongovernments can't build a sustainable society, because they don't agree on variousdevelopmental policies, as has been our experience in the recent past with the UPAGovernance in our country. The process of economic reforms under UPA regime couldnot make much headway due to disagreements over issues related with labour reforms,

policy towards FDI, disinvestment, financial sector reforms related with banking,insurance, pensions etc. among the coalition partners. Therefore, for the success ofsustained growth, political consensus is a necessary condition. The agitation by TrinmoolCongress in Singur in West Bengal at Tata Nano plant created a problem, which has

wider repercussions on the industrialization of West Bengal. SEZ policy needs a

thorough revamp in future. Adequate compensation and other financial support should begiven to the farmers who are dispossessed of their lands.

2. At the international level also, there must be fullcooperationbetween the developing andthe developed countries over global issues; e.g., WTO's 'Doha Round', which wasinitiated as a 'Development Round' in 2001, is still in doldrums, and it is still not nearingits completion after 7 years of hectic negotiations. It is going 'Round' and 'Round' so farwith no end in sight. It follows the dictum that 'Northing will be agreed, until everythingis agreed'. Even the mini-ministerial meet at Geneva in July 2008 failed becausedeveloped countries insisted that Special Safeguard Measures or Mechanism (SSMs)should be used by developing countries, when the imports in their countries exceeded thelevel of 40% over the agreed base period of imports, but developing countries wanted to

use them when their imports exceeded 15% over an agreed base period. Thus, thecontroversy over cap of 140% vs 115% for SSM application and the issue of cotton

subsidies to US farmers led to the breakdown of Geneva talks. Under these situations, wefind multilateralism failing in its goal of promoting global trade as fast as possible.Sustainability of global trade is in jeopardy under the present situation. There must be afair deal on the basis of 'give and take' to promote world trade, investments andtechnology-transfers. Developed countries should extend full assistance and cooperationtowards developing countries, particularly towards poor and low-income countries, sothat the gaps between them are narrowed down to attain greater economic sustainabilityin their growth process in future. Less Than Full Reciprocity (LTFR) principle is builtinto the WTO system.

There has been a political hijacking of the Indo-US Civil Nuclear Deal over thecontroversy that 'India has the right to test nuclear weapons, and US has the right to reactand cancel the deal'. The situation is opaque, not fully transparent. It is a pity that suchserious issues are left in lurch, when there is need for global cooperation to promote thewelfare of the people. NSG of 45 countries should support the cause of India by grantingan unconditional waiver to it. In the meeting of 45 countries of NSG, India has got cleanwaiver and now India's nuclear isolation has ended and it can nuclear trade with the entire
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world. This is a great historic achievement and will lead India towards sustainable energydevelopment.

3. At the present stage of globalisation, it is more appropriate to say that instead of progresstowards economic globalisation, there has been an assured, terrific and dreadful progress

towards the globalisation of terrorism. Practically all the nations of the world are seizedwith this problem, and they are seeking global solution to fight this menace. But so farthe solution is in sight in the near future. There is a glib talk of global cooperation invarious fora to fight terrorism, but terrorism and terrorists walk merrily here, there, andeverywhere. Sustainable growth wants an end of terrorism from every nook and corner ofthe earth. There is a need to search for a final onslaught on this menace in the near future.

4. Apart from man-made calamities, natural calamities like earthquakes, floods, famines,hurricanes, storms, droughts, etc. spread havoc from time to time in different countries,and disaster management has become the need of hour to deal with such unforeseensituations on a massive scale. Lakhs of people suffering from the fury of Kosi andunprecedented flood in Bihar in August-September 2008 call for a total change in the

developmental model of the nation. It has proved hollow for them. A new look for a saferworld is needed to save people from colossal losses in future.5. Thus, we need not only economic sustainability, but also political sustainability,

environmental sustainability, energy sustainability and above all technologicalsustainability.

References:

1. Peter P. Rogers, Kazi F. Jalal and John A. Boyd, An Introduction to SustainableDevelopment, 2008, Chapters 2, 9 and 14.2. Jeffrey D. Sachs, Commonwealth: Economics For a Crowded Planet, 2008.

3. World Development Report, 2008: Agriculture for Development, The World Bank.4. World Development Indicators, 2008, The World Bank.5. The Growth Report: Strategies for Sustained Growth and Inclusive Development, 2008,

(Chairman: Michael Spence).6. Amartya Sen, The Argumentative Indian: Writings on Indian Culture, History and

Identify, 2005.7. Arun Maira, Creating a new economics, article inthe Economic Times, 12 November

2007.8. CP Chandrasekhar and Jayati Ghosh, Whatever happened to economic growth?,

Macroscan, Business Line, August 12, 2008, p. 9.9. PP Sangal, India's Climate change action plan, The Economic Times, July 27, 2008
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