Why Growth Matters (5 page)

As Indira Gandhi embarked upon her socialist agenda, many analysts came to argue that the development programs initiated immediately after independence—the First Five-Year Plan spanned 1951–1952 to 1955–1956—had pursued growth for its own sake and ignored poverty alleviation. This assertion would be revived later in the wake of the assault on socialism by the post-1991 reforms.

The myth eventually found its way into the first Human Development Report published by the United Nations Development Program (UNDP 1990). In its technical note (p. 104), the report noted, “While the pioneers of measurement of national output and income stressed the importance of social concerns, economic growth became the main focus after the Second World War. . . . The growth rate of per capita GDP became the sole measure of development.” It added, “As GNP became the goal of development in the 1950s and 1960s, the question of promoting individual well-being receded.”

This narrative is wide off the mark, surely in the Indian context and very likely for other countries as well. The notion that GNP became during the 1950s and 1960s the “sole measure of development” to the neglect of poverty and related “social” objectives can be made only by ignorant critics. Not merely was growth seen from the earliest times, even before independence and not just when India began its Five-Year Plans, essentially as a strategy to achieve “social” objectives, especially poverty reduction. But there is also simply no evidence for the assertion that the Indian planners shifted away from these objectives during the 1950s and 1960s. In fact, there is plenty of evidence to the contrary from numerous evaluation reports on these objectives, and from extended at
tention to these objectives in the texts of the First, Second, and Third Five-Year Plans.

The immediate postindependence leadership in India had thought of, and indeed written about, growth as the
instrument
and poverty alleviation as the
objective
. Well before independence in 1947, as early as 1938, the Indian National Congress had taken the initiative to appoint a fifteen-member National Planning Committee under the chairmanship of Jawaharlal Nehru to evolve the development strategy that would be implemented once independence was achieved. The members of the committee were picked from diverse disciplines and were important thinkers in their respective areas. They included three economists as well.
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In his monumental work,
The Discovery of India
, Nehru (1946) offers the following fascinating account of the thinking behind the committee's decision in favor of a growth-centered strategy: “Obviously we could not consider any problem, much less plan, without some definite aim and social objective. That aim was to be to ensure an adequate standard of living for the masses, in other words, to get rid of the appalling poverty of the people. . . . To . . . ensure an irreducible minimum standard for everybody the national income had to be greatly increased. . . . We calculated that a really progressive standard of living would necessitate the increase of the national wealth by 500 or 600 per cent. That was, however, too big a jump for us, and we aimed at a 200 to 300 per cent increase within ten years.”

The Planning Committee's ideas eventually influenced the design of India's development plans. While poverty alleviation and equitable distribution figured as true goals, growth remained the central element in the strategy, with redistribution serving as only a subsidiary instrument.
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For example, the First Five-Year Plan stated at the outset, “The urge to economic and social change under present conditions comes from the fact of poverty and of inequalities in income, wealth and opportunity. The elimination of poverty cannot, obviously, be achieved merely by redistributing existing wealth. Nor can a program aiming only at raising production remove existing inequalities. The two have to be considered together; only a simultaneous advance along both these lines can create
the conditions in which the community can put forth its best efforts for promoting development.''

The evidence therefore lends no support to the claims that India pursued growth for its own sake, ignoring poverty reduction, in the immediate postindependence era. Nor did the objective shift from poverty alleviation to “growth for its own sake” alongside the launch of the liberalizing reforms. For starters, we could look for the corroborating evidence in the 2004 Bharatiya Janata Party (BJP) election manifesto since the BJP is the party that has been blamed most vociferously for pursuing the “India Shining” agenda, to the neglect of the poor. A quick search through the
Vision Document
the BJP issued in 2004 shows, however, that not only was the party not guilty of this error but, like the early Five-Year Plans, it drew an explicit connection between growth as the instrument and poverty alleviation as the objective.
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The same message echoes in the speeches of Prime Minister Atal Bihari Vajpayee, who stated in his Independence Day address on August 15, 2000, “We have to accelerate and broaden our development process, so that no child of Mother India remains hungry, homeless, unemployed or without access to medical care. We have to reduce regional and social disparities. We have to make our brethren belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes and other minorities equal partners in our development process. To realize this goal, we have decided to achieve the target of doubling India's per-capita income in the next ten years.” Programs such as the universal elementary education, Prime Minister's Rural Road Program and major rural electrification program were all part of the policies of the Vajpayee government.

The recent drives to recognize education and health as fundamental rights, culminating in the passage of the 2009 Right to Education Act and proposals for a similar act on health, have been accompanied by assertions that even if the early leaders saw poverty eradication as a key
goal of policy, they failed to recognize the importance of education, health, and other similar determinants of human welfare.

Of course, eradicating poverty may have been regarded implicitly as leading to a richer existence of which education and health are integral parts. However, this is not the case. Instead, these objectives were given star billing by the Indian planners. The assertion of neglect of health and education as developmental objectives is so insidious that we must provide fuller documentation of its falsehood.

The 1938 Planning Committee, mentioned above, explicitly considered virtually every economic aspect of human existence that determines welfare. The relevant part of the account Nehru (1946) provides of these deliberations is once again worthy of reproduction in this context. After explaining why a significant rise in the national income was essential to combating poverty, he goes on to state,

We fixed a ten-year period for the plan, with control figures for different periods and different sectors of economic life. Certain objective tests were also suggested:

(1) The improvement of nutrition—a balanced diet having calorific value of 2,400 to 2,800 units for an adult worker.

(2) Improvement in clothing from the then consumption of about fifteen yards to at least thirty yards
per capita
per annum.

(3) Housing standards to reach at least 100 square
feet per capita
. Further, certain indices of progress had to be kept in mind:

(i) Increase in agricultural production. (ii) Increase in industrial production. (iii) Diminution of unemployment. (iv) Increase
in per capita
income. (v) Liquidation of illiteracy. (vi) Increase in public utility services. (vii) Provision of medical aid on the basis of one unit for 1,000 population. (viii) Increase in the average expectation of life.

Clearly the committee's concerns went well beyond the abstract eradication of poverty by some monetary metric and explicitly included
education, health, shelter, and clothing. These concerns were subsequently incorporated into the Five-Year Plans. A detailed consideration of the contents of the First Five-Year Plan in health and education demonstrates the depth and breadth of the planners' concerns.
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After emphasizing the need for both growth and redistribution to eradicate poverty,
Chapter 1
of the First Five-Year Plan states that the policy's objective is to remodel the socioeconomic framework to accommodate the impulses that express themselves “in the demands for the right to work, the right to adequate income, the right to education and to a measure of insurance against old age, sickness and other disabilities.”
Chapter 2
reiterates the importance of social objectives, stating, “We have not only to build up a big productive machine—though this is no doubt a necessary condition of development—we have at the same time to improve health, sanitation and education and create social conditions for vigorous cultural advance.”

The plan goes on to devote entire separate chapters to each of health and education. These chapters are remarkable for the thoroughness of their coverage of relevant policy issues and documentation of the conditions in these sectors. The chapter on health begins by recognizing that “health is fundamental to national progress” and that “for the efficiency of industry and of agriculture, the health of the worker is an essential consideration.” It adds, “Health is a positive state of well being in which the harmonious development of physical and mental capacities of the individual lead to the enjoyment of a rich and full life.”

In the plan, the chapter explicitly discusses life expectancy, infant mortality, child mortality, maternal mortality, and cause-specific mortality. It then addresses in careful detail the issues of medical personnel and physical facilities and identifies as policy priorities the provision of water supply and sanitation, control of malaria, preventive health care of the rural population through health services for mothers and children, health education, self-sufficiency in drugs and equipment, and family planning and population control.

The chapter sets specific targets for hospitals, rural and urban dispensaries and medical personnel, and the number of beds in each of them
by the end of the plan period. It also contains a long section on nutrition, identifying the need for cereals, pulses, fruits, vegetables, milk, sugar, eggs, and meat for 300 million adult Indians. Finally, it discusses a number of specific diseases, including malaria, tuberculosis, venereal diseases, leprosy and even cancer, a disease barely known at the time.

The education chapter exhibits similar depth and breadth. It begins by noting that the existing enrollments at 40 percent for children ages six to eleven, 10 percent for ages eleven to seventeen, and 0.9 percent for ages seventeen to twenty-three are highly inadequate. It goes on to note that the directive principles of the Constitution require that “free and compulsory education should be provided for all children up to the age of 14 within ten years of the commencement of the Constitution.” Thus, the concern for universal free education up to age fourteen, embodied in the Right to Education Act of 2009, has a very long history.

Next the chapter discusses the structure of the educational system at various levels and its internal consistency, pointing out that the provision at the university level is larger than what the secondary and primary levels can profitably support. It finds the allocation of 34.2 percent of the total educational expenditures to primary education in 1949–1950 to be exceptionally low. It recommends shifting in favor of primary and secondary education and away from higher education. After a careful analysis, the plan sets explicit goals for expanding primary and secondary enrollments to 60 percent and 15 percent, respectively, by 1955–1956.

A number of committees recommended key changes on the health front. For example, the recommendations of the Health Survey and Planning Committee (Mudaliar Committee 1961) led to the establishment and expansion of primary health care centers and subcenters in the rural areas beginning in the early 1960s. Likewise, the Kartar Singh Committee Report on Multipurpose Workers (1973) and the Srivastava Committee Report on Medical Education and Support Manpower (1975) provided recommendations on distributing health cadres at the primary level. The buildup of rural health infrastructure got particular impetus during the Fifth Five-Year Plan (1974–1975 to 1978–1979) under its Minimum Needed Program.
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The goal of universal free education for children between six and fourteen years of age by 1960 was missed by a wide margin. Indeed, two national policy statements in 1968 and 1986 (revised in 1992) and the passage of four more decades still left India some distance away from the goal. In 2001, the country launched the
Sarva Shiksha Abhiyan
, or National Movement for Universal (Elementary) Education. The country even passed the eighty-sixth constitutional amendment in 2002, elevating the right to education from a directive principle of state policy to a fundamental right. However, the implementing legislation, the Right to Education Act, was not passed until 2009.

This brief review of very broad developments shows that a lack of awareness of the importance of health and education or the absence of good intentions was not behind the slow progress in these areas. Instead, as we will argue more fully below, progress was inhibited by slow growth. With limited national income, the government could muster only limited revenues.
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In the area of education, although the government had amended the Constitution to make elementary education a fundamental right in 2002 and had prepared a first draft of implementing legislation as early as 2003, the Finance Committee and the Planning Commission rejected it, citing lack of funds. It took four more years of negotiations among various constituencies to modify the bill to a point where it could be financed.
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