By Raghunath Nageswaran
David Pillings book, The Growth Delusion: The Wealth and Well-Being of Nations is not a tirade against economic growth and neither is it an anti-growth or de-growth manifesto. It is a sensible and lively account of the positives and pitfalls of growth as measured by the GDP, and has the potential to become a defining conversation starter on the usefulness of GDP as it is measured today. Pilling makes his intention to broaden the conversation on growth very clear by including the words wealth and well-being in the title, concepts that go beyond the narrow definition of economic growth as an expansion in the flow of goods and services measured in monetary terms.
In an otherwise superbly written book, the chapter on India titled Growthmanship stands out as an aberration in terms of analysis as it lacks nuance and regurgitates a clichéd narrative about Indias post-Independence economic evolution. While one may consider his account as conventional wisdom, it is key to remember that the universe of knowledge expands by challenging conventional wisdom. That is precisely what Pilling has managed to do quite forcefully throughout the book and hence the sketchy treatment of Indias economic growth comes as a surprise.
Comparison with the other East Asian countries
Indias complexity and heterogeneity have generated diverse narratives about the nature and impact of economic growth in the country but the sway that mainstream narrative holds on how the world looks at India and its domestic economic policy is clearly reflected in the pages on India in this book. Comparing Indias policy choices and development experience with the East Asian countries such as South Korea has become a staple academic exercise but rarely does the context-specific nature of policy thinking and outcomes figure in both academic and popular discussions. The charge that India did not take the export-led path to development and adopted an import substitution strategy of industrial development is a popular one but not by any means irrefutable.
Ha Joon Chang, whom Pilling quotes in his book, has convincingly shown that across the board, countries have resorted to various forms of protectionism to develop their domestic industries and accumulate technological capabilities in their early stages of development. East Asian countries took the export route to achieve scale economies as the size of their domestic market was small. India didnt have to do that for two reasons; one, its domestic market was big enough to enable it to achieve scale economies and two, its comparative advantage was in primary commodities which have the tendency to suffer unfavourable terms of trade vis-à-vis manufactured goods. The intention was to build productive capacity domestically and keep comparative advantage dynamic. The biggest policy mistake, however, was the failure to implement land reforms on a national scale, which would have meant an egalitarian distribution of productive assets in a country that was predominantly rural and consequently widened the social base of Indias domestic market.
India’s age-old internal contradictions
Also, it is important to remember three things. First, public sector enterprises were set up with the mandate of mobilising resources for fostering industrialisation-led economic development and not with a populist-redistributionist objective. Second, one of the most promising forms of redistribution, public provisioning of mass school education to facilitate upward mobility, did not happen in the first few decades after Independence. Third, as the historian, Srinath Raghavan has posited in his book, India’s War: The Making of Modern South Asia, the model of planned economic development adopted by India owed its origins as much to the war-time economic planning of the Raj, as it did to Jawaharlal Nehrus pro-Soviet inclination. So the arguments that Nehru had a strong socialist and distributionist streak and that there was so little to distribute mentioned in the book are predicated on weak grounds.
Opposition to Mahatma Gandhi’s ideologies
Another argument that has been propagated and perpetuated for decades now is the following: Mahatma Gandhi, the leader of the independence movement against British colonialism, held a romantic idea of life in the Indian villages. Those views influenced post-Independence thinking, insinuating into national discourse the idea that there was something noble about poverty.
Contrary to popular opinion, Gandhis vision of a just and non-violent decentralized economic order centred on village republics was developed within a moral-material framework. He sought to guarantee the dignity of the individual by securing dignity of labour. Building a wholesome life according to Gandhi, depended on binding people into a moral compact based on mutuality and co-operation. On the question of the appropriate economic model to be adopted for India, the Indian National Congress had its love-hate relationship with Gandhi at best since the mid-1930s, as the official party line was dominated by the likes of Nehru, Subhash Bose and Patel who did not show any inclination towards constructive village work. It is important to understand the distinction between poverty and simplicity to appreciate the rural reconstruction agenda put forward by Gandhi.
The rest of the narrative on India in the book draws upon the well-known Sen-Bhagwati debate. It is imperative to go beyond standard narratives and popular debates to acknowledge the fact that growth doesnt automatically translate into better living conditions for people, especially when the fruits of growth are mediated by the various fault lines in the society, not to mention the very framework within which economic growth of a predatory variety takes place.
In The Growth Delusion, Pillings account of the Chinese growth experience and the initiatives undertaken by the country in terms of production processes, energy consumption and accounting practices that strive to be environment-friendly is rounded in its assessment. Had the same been done with regard to Indias development experience, the readers would have got a better sense of what is going on in the two most populous and equally promising economies in the world and what it augurs for the future of economic growth.
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