Why don’t we get it about development: Financial Express:10th October

In the early 1980s it was quite common to see Rajiv Gandhi on TV, talking convincingly to a large gathering of presumably illiterate villagers about the great strides which the Congress party had taken in building the information technology highway and the different allocations for mega power projects in the Plan and so on. While the speech was in Hindi, these achievements would be uttered in English as the peasants nodded away in appreciation. He went on to win the elections and become PM. Things are not very different today where successive governments speak eloquently on how the Indian economy is one of the fastest growing nations, which has withstood the financial crisis and will be growing by 6%, or 7% or even 8% this year. The stock markets react buoyantly and there are several interviews with the PM, FM, Planning Commission etc, where these numbers are explained. The two situations are similar because in both the cases we are looking very narrowly at the economy and the performance of the government and probably feeling good about it without pausing to see if life around us has really improved. UNDP’s recently released Human Development Report is an eye-opener as it comes at a time when we are in this mode of self-praise, and brings us back to reality. Looking at growth numbers is passé today and the French President Mr Sarkozy has spoken of a happiness index to gauge the real success of an economy and Joseph Stiglitz is a part of the committee that will be looking at conceptualising these alternatives. Now, the HDI (Human Development Index) has been doing this for some time. The HDI basically looks at four parameters such as life expectancy, adult literacy, enrolment rate and per capita income and scores the nation out of 1. India has got a score of 0.612 and comes in the lower half of the medium range of human development countries and is ranked 134 out of a set of 184 countries. This is disappointing because it clearly shows that our performance is pathetic in the area of social development, which is missed when we talk of our growth story. The curious part is that while we are better than countries like Pakistan and Bangladesh, we are lower than Botswana and Bhutan. Clubbing India as part of the Bric group looks odd considering that Russia and Brazil are ranked 59 and.75 and come under the high human development group, while China is ranked in the upper half of the medium development group with a rank of 92 and a score of 0.772. It is not hard to guess that the countries which are ranked lower than India are generally located in Africa (over 35 of the remaining 48 nations). Quite clearly, there is a lot of housekeeping that needs to be focused on before we take our growth numbers seriously. In fact, the report also does a check on the rank of a country with respect to human development and the same in per capita income and the difference is presented. India has a negative number here. It is time that we did focus on the quality of development and not get carried away by purely growth indicators which camouflage the true picture. This report is significant as it comes a month or so after the World Bank and IFC brought out the Doing Business Report for 2010. This report talks of the basic environment provided by the government for industry to operate. It talks in some detail on the ranking of countries in terms of the ease of doing business and has ranked India 133 in a list of 183 countries. Once again we seem to be falling short of expectations and it indicates to an extent the difficulties that industry faces when doing business in India. Quite expectedly the African countries and certain Central and Latin American countries fare lower than India. Some of the sub-ranks that we have are 182 in enforcing contracts, 169 in taxation, 175 for construction permits and 138 for closing business. This means two things. The first is that even in terms of facilitating industrial growth, we have not done much and we make things difficult for industry to operate. The impediments are high, which means that despite the sounds made on economic reforms and liberalisation, life is still tough for those who operate within our boundaries. The second is that enterprise in India has to be lauded for doing this well despite tough operational conditions. We evidently can produce better numbers if we are able to bring about improvements in our mindsets. The two reports, hence, do expose considerable frailties in bringing about quality growth in the country and clearly show the distance between the developed and developing nations. More significantly,even within the developing nations our approach can be improved substantially to deliver superior results.