Sunday, March 06, 2011

It is immoral for us to slow growth

Chinese Premier Wen Jiabao said last Sunday that his country’s annual growth target has been lowered to seven percent for the next five years. He made this remark in an on-line chat with the nation. “We must no longer sacrifice the environment for the sake of rapid growth as that is unsustainable,” he said. He urged the government to shift its focus from GDP growth to the quality and benefits of growth.

Premier Wen’s statement comes in the wake of huge concerns in the West over the impact of China’s (and India’s) economic growth on the global environment. China's GDP growth reached 10.3 percent last year and is expected to be nine percent this year. Although he was talking to his netizens, Wen’s message was aimed at his critics in the West. His remarks appear to be eminently sensible--who could be against protecting nature? But is Premier Wen right to slow down the growth rate of a poor nation? I do not think so.

There is a saying that a woman can either be beautiful or faithful but not both. The proverb illustrates the human tendency to create mental boxes and fit people into them. Wen appears to have fallen into the ecological trap in believing that you can either have high growth or a clean environment. We too will soon be asked that if China is taking steps to lower its growth rate, why is India still obsessed with high growth? Indeed, the day after Wen’s online chat, India’s finance minister Pranab Mukherjee presented a road map in the Budget to achieve a 9% GDP growth rate, hoping that it might go higher.

The dichotomy between high growth and protecting the environment is false. A nation can grow rapidly and save its environment just as a woman can be both beautiful and faithful. The only sensible way to grow, in fact, is to make peace with nature and save the green-blue film on which life itself depends. But to ask a poor country to slow down its economic growth is immoral—it is to condemn its poor to penury. The past two hundred years teach us that the poor will only rise into the middle class unless there is growth. Growth creates jobs and wealth, which the government taxes and spends on roads, education and healthcare, and this enables the poor to rise. Indeed, 350 million Chinese and 225 million Indians have risen out of poverty in the past 25 years because of high growth.

Once upon a time I used to be a huge fan of the ecology movement, but I feel gloomy today. I am upset that so many fine projects have suffered from endless delay at the hands of activists. No one calculates the real cost of delay--the lost future of a starving child who does not realise a dream when a factory or power plant does not come up. The movement has evolved into an anti-science, anti-growth, secular religion. I shudder to think that if activists had been as zealous in the 1960s, they would have killed India’s ‘green revolution’, which multiplied our wheat and rice crop many times and succeeded in feeding 500 million additional mouths.

Meanwhile, bureaucrats and politicians have captured ecology and made it a lucrative business in India. Indeed, the prime minister complained in 2009, “Environmental clearances have become a new form of Licence Raj and corruption.” Hence, I was glad when a clean, modern minister came in 2009. But my optimism soured quickly when he turned activist and began to re-open major projects, such as Niyamgiri, Lavasa and POSCO, and proceeded to “make an example” of them. His arbitrariness resounded around the world and turned investors against India. The Reserve Bank reported recently that India’s foreign direct investment declined by 36% in the first half of 2010-11 primarily because of “environment policies in mining, integrated township projects and ports.” Of course, the environment ministry must ensure that projects meet standards, but it must do so by creating transparent institutions and not through arbitrary acts.

All of us must become sensitive to nature, especially with the rapid degradation of forest cover and global warming. But we must also be aware of the fundamentalist and irrational nature of the ecology movement, which is willing to sacrifice human opportunities to preserving nature. Environmentalists have nostalgia for vanishing, old lifestyles and refuse to admit that their earlier Malthusian predictions were wrong. Despite massive population growth, people around the world are better off today, and as prosperity and education spreads, population growth has begun to slow down in most countries. Obviously, we have to protect nature, but if it does come to a choice, human beings, I think, must precede nature. To believe the contrary is not only elitist but also immoral.


Tarun Bafna said...

Your article has pointed out an important concern about the sudden activism in environment ministry with regard to various development projects.It has been observed that initially their is being big hue and cry but later on permissions are being granted be it mumbai airport or posco, is it shows that how policies can be molded arbitrarily, if such things continues we will again fall in vicious cycle of license raj........

Aravind said...

The debate has been hijacked and forced the govts to slow down due to lack of institutional mechanisms to check and safeguard interests of stake holders. The ministry should NOT depend on the individual heading the ministry but on devising the laws that will enable sustainable development. Also, the governments in power abandon all norms and sell lands to crony business interests without compensating inhabitants, at rock bottom prices and little regulation. This lead to indiscriminate mining, destruction and looting of natural resources in Andhra Pradesh and Karnataka. Public is losing the trust in private industry but the real culprit is govt that overreaches and under-delivers.

Yuvamani said...

Great Stuff as always !

I have always wondered what the new "religion" you talk about wants ? Some members seem to support anarchy and maoists. They routinely oppose roads, bridges, dams, factories etc etc They want more for the poor and the downtrodden.

But if they oppose the projects which enable the downtrodden then they will be even more poor ... Sad thing is this will always be lost on people !

Raji said...

I loved your article and read it in the Times of India. I agree with you 100%. I blogged about it the same day, as I didn't know about this blog till today

Umesh Bawa said...

chinese are amending their legislation of growth and success, day by day, with crippling and unamicable growth factors. Due to which they are sustainung they are able to stabilise the traits of being wealthy...hence, india needs to learn the same. Beaurocratic dilemma needs to be unleash now....

Pieces Of My Life said...

To me, it would be great if a balance is struck between both growth and ecological losses (which is inevitable). That's why institutes like MoEF are present. But sad that these agencies are incompetant and churning out so much of unwarranted attention and sound bytes to the opposition of development. I am not in favour of many development projects whose soul aim is to exploit the locals (or the nation for that matter) - such things are everyday phenomenon coz of only one thing - Corruption (visible or invisible). Curb it and curb such menaces.

Unknown said...

I disagree with your statement ".... India’s ‘green revolution’, which multiplied our wheat and rice crop many times and succeeded in feeding 500 million additional mouths" for two reasons:

1.Does it verify statistically that more production meant less hunger.I doubt that considering India's poor public distribution

2.What was cost of green revolution to the economy (subsidies which govt gave) and cost of production for farmers.It was apparently high

These things needs to be verified before reaching conclusion and this is only from economic viewpoint not even considering the environmental impact which it migh have had.

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Unknown said...

Great article. This also highlights (once again), the nature of our policies, and functioning. The higher the position one holds, greater is the power he wields not by what he does, but by his nuisance value. Every department worth its name functions like this. Be it police, ministries, or bureaucrats. If we create a ministry to monitor something, there appears a power center again, which then starts obstructing the whole process of governance.

ashirwaad-holiday-apts-goa said...

When people are immoral, they don't care about immorality.

Manny said...

I think an important point is getting missed here. The reason China is talking about lowing down growth is not just environment, but for the more important reason, that they want good growth.
All these years, the growth has come at the cost of environment. The growth is not generating enough jobs. The consumption of households and their contribution to GDP is dropping. Exterior provinces are doing well, but not interior provinces.
So the aim is to rebalance the growth. That is make it less rely on investments. Savings rate is very high and still increasing. The savings are going into banking system which in turn goes into investments, but not all are good investments.
A lot of these investments are into housing. But most people cannot afford them. So whether the investment is productive or not, it adds to GDP. There is a building which has been built. In general its fine.
The problem is that the banks are not lending this money to the best investments - creating jobs. So the households are not getting the benefit and their consumption is declining. So who is benefitting- the owners are of the capital.
In US people are owners of capital, by stock ownership to a large extent. But in China, stock ownership is very uneven distribution or in general the distribution of capital. The system is changing where people do not have a safety net. So this change says that don’t save that much, we will provide a safety net.
Reform the banking system. Households save a lot. But with the inflation adjusted terms, the returns they get are actually negative. Because the Chinese banks cap the interest rate, to prevent competition.
And finally, to address the grievances of workers, who are saying that we are doing better, but not as good as the country or the owners of capital are.
One of the main aims to control inflation since it affects their food prices.

Objectivist Mantra said...

I am deeply worried by the fact that instead of being a real democracy, India seems to be overtaken by a mob of self righteous folks, with extreme leftist leanings. I am suspicious of this Jantar Mantra brigade, which prefers to call itself by the lofty name of Civil Society. Is this only a ploy to stop all development initiatives in the country? No dams, no industries, no roads, and no economic reforms!

Thanks to the hapless government at the centre, this Civil society is now the most powerful entity in the country; it is more powerful than the Congress or the BJP. These Civil Society Members are incapable of winning one seat in the country on their own, and yet they now enjoy the supreme power.

So it is only fair that the Jantar Mantar brigade of Civil Society should declare their assets.

The power of passing new laws is the greatest power in the hands of MPs and MLAs, but Jantar Mantar party of civil society has got that power without their having to contest an election. In India corruption is not a monopoly of the government, even sportspersons, celebrities and majority of the NGOs have been found to be corrupt.

The members of so-called Civil Society who will sit down to legislate the new Lok Pal Bill should be like the Caesar’s Wife. Like the Caesar’s wife they should not only be pure, they should also be perceived to be pure. Right now very little is known about these individuals and NGOs, so can we have some kind of clarity please.

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absorbing normalcy said...

what we owe to public is good performance.india's five year plans are making india grow quickly,guzzling gas,oil,coal in large quantity to play catchup with developed is an established fact that environment will be destroyed if we continued on our path of economic growth.our wealth warped values and excessive drive for success contribute to serious environment pollution.ten years ago people were desirous of earning there first they talk about million dollar.too much of good thing is wonderful.more the merrier.

Anshul said...

Different angle...and high class
great work, Sir

Vijay said...

Excellent article sir

asanandan said...

of course, acceptable one.


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Prices India said...

I have always wondered what the new "religion" you talk about wants ? Some members seem to support anarchy and maoists. They routinely oppose roads, bridges, dams, factories etc etc.

Jeevak Kasarkod said...

There are couple of issues I see with the arguments here
1. Basing growth on GDP which is a flawed metric since it doesnt take a lot of transactions into account and from an ecological perspective treats destruction of natural capital as current income instead of capital destruction.
2. The assumption that the dichotomy between environment and growth does not exist in the private sector in India. The private sector is very capable of including sustainable practices in their growth strategy but it is conveniently sidelined for rapid growth.

If we are focused only on bringing as many people out of poverty right now instead of a sustainable growth into the future then the approach outlined here works.

Anupam said...

I don't entirely agree with you. Certainly environment has fallen into the traps of Licencing but Jairam Ramesh seems to be doing a god job. Foreign Investments may have come down but as you say India is an elephant and for the good it is.
Mumbai airport was sanctioned only after concerns for ecological damage were taken into account and remedies rendered by changing the blue print of Airport( which I thing is a great success in India where most projects are recklessly designed to cut down cost).
Foreigners often invest in India because of easy environmental regulations. Same company which will set up swanky environment friendly plants abroad will not to do so in India for eg. Union Carbide in Bhopal.You don't such incident taking place again.
Similarly mangroves are essential for Navi Mumbai's coast( though even I wonder at times that Palm Beach could be even more beautiful than Marine Drive).
So the need is to bring out a cost effective and better designs for development infrastructure and economic projects with due consideration to environment. Multinational and even Indian companies don't understand this right now w.r.t. to India. But with constant resistance they will soon adapt to working on projects which are economically viable in the first place itself without giving an opportunity to govt to delay projects or to harass them for their ends.
It is not just govt but the industrialist who also need to be elastic, dynamic and prudent. Elephant doesn't always remain calm and sensible it has its mad phases and it certainly represents India :)

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I loved your article and read it in the Times of India. I agree with you 100%. I blogged about it the same day, as I didn't know about this blog till today.

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