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print versionThe New York Review of Books, May 12, 2011
1.
The steadily rising rate of economic growth in India has recently been around 8 percent per year (it is expected to be 9 percent this year), and there is much speculation about whether and when India may catch up with and surpass China’s over 10 percent growth rate. Despite the evident excitement that this subject seems to cause in India and abroad, it is surely rather silly to be obsessed about India’s overtaking China in the rate of growth of GNP, while not comparing India with China in other respects, like education, basic health, or life expectancy. Economic growth can, of course, be enormously helpful in advancing living standards and in battling poverty. But there is little cause for taking the growth of GNP to be an end in itself, rather than seeing it as an important means for achieving things we value.
It could, however, be asked why this distinction should make much difference, since economic growth does enhance our ability to improve living standards. The central point to appreciate here is that while economic growth is important for enhancing living conditions, its reach and impact depend greatly on what we do with the increased income. The relation between economic growth and the advancement of living standards depends on many factors, including economic and social inequality and, no less importantly, on what the government does with the public revenue that is generated by economic growth.
Some statistics about China and India, drawn mainly from the World Bank and the United Nations, are relevant here. Life expectancy at birth in China is 73.5 years; in India it is 64.4 years. The infant mortality rate is fifty per thousand in India, compared with just seventeen in China; the mortality rate for children under five is sixty-six per thousand for Indians and nineteen for the Chinese; and the maternal mortality rate is 230 per 100,000 live births in India and thirty-eight in China. The mean years of schooling in India were estimated to be 4.4 years, compared with 7.5 years in China. China’s adult literacy rate is 94 percent, compared with India’s 74 percent according to the preliminary tables of the 2011 census.
As a result of India’s effort to improve the schooling of girls, its literacy rate for women between the ages of fifteen and twenty-four has clearly risen; but that rate is still not much above 80 percent, whereas in China it is 99 percent. One of the serious failures of India is that a very substantial proportion of Indian children are, to varying degrees, undernourished (depending on the criteria used, the proportion can come close to half of all children), compared with a very small proportion in China. Only 66 percent of Indian children are immunized with triple vaccine (diphtheria/pertussis/tetanus), as opposed to 97 percent in China.
Comparing India with China according to such standards can be more useful for policy discussions in India than confining the comparison to GNP growth rates only. Those who are fearful that India’s growth performance would suffer if it paid more attention to “social objectives†such as education and health care should seriously consider that notwithstanding these “social†activities and achievements, China’s rate of GNP growth is still clearly higher than India’s.
2.
Higher GNP has certainly helped China to reduce various indicators of poverty and deprivation, and to expand different features of the quality of life. There is every reason to want to encourage sustainable economic growth in India in order to improve living standards today and in the future (including taking care of the environment in which we live). Sustainable economic growth is a very good thing in a way that “growth mania†is not.
GNP per capita is, however, not invariably a good predictor of valuable features of our lives, for those features depend also on other things that we do—or fail to do. Compare India with Bangladesh. In income, India has a huge lead over Bangladesh, with a GNP per capita of $1,170, compared with $590 in Bangladesh, in comparable units of purchasing power. This difference has expanded rapidly because of India’s faster rate of recent economic growth, and that, of course, is a point in India’s favor. India’s substantially higher rank than Bangladesh in the UN Human Development Index (HDI) is largely due to this particular achievement. But we must ask how well India’s income advantage is reflected in other things that also matter. I fear the answer is: not well at all.
Life expectancy in Bangladesh is 66.9 years compared with India’s 64.4. The proportion of underweight children in Bangladesh (41.3 percent) is lower than in India (43.5), and its fertility rate (2.3) is also lower than India’s (2.7). Mean years of schooling amount to 4.8 years in Bangladesh compared with India’s 4.4 years. While India is ahead of Bangladesh in the male literacy rate for the age group between fifteen and twenty-four, the female rate in Bangladesh is higher than in India. Interestingly, the female literacy rate among young Bangladeshis is actually higher than the male rate, whereas young women still have substantially lower rates than young males in India. There is much evidence to suggest that Bangladesh’s current progress has a great deal to do with the role that liberated Bangladeshi women are beginning to play in the country.
What about health? The mortality rate of children under five is sixty-six per thousand in India compared with fifty-two in Bangladesh. In infant mortality, Bangladesh has a similar advantage: it is fifty per thousand in India and forty-one in Bangladesh. While 94 percent of Bangladeshi children are immunized with DPT vaccine, only 66 percent of Indian children are. In each of these respects, Bangladesh does better than India, despite having only half of India’s per capita income.
Of course, Bangladesh’s living conditions will benefit greatly from higher economic growth, particularly if the country uses it as a means of doing good things, rather than treating economic growth and high per capita income as ends in themselves. It is to the huge credit of Bangladesh that despite the adversity of low income it has been able to do so much so quickly; the imaginative activism of Bangladeshi NGOs (such as the Grameen Bank, the pioneering microcredit institution, and BRAC, a large-scale initiative aimed at removing poverty) as well as the committed public policies of the government have both contributed to the results. But higher income, including larger public resources, will obviously enhance Bangladesh’s ability to achieve better lives for its people.
3.
One of the positive things about economic growth is that it generates public resources that the government can devote to its priorities. In fact, public resources very often grow faster than the GNP. The gross tax revenue, for example, of the government of India (corrected for price rise) is now more than four times what it was just twenty years ago, in 1990–1991. This is a substantially bigger jump than the price-corrected GNP.
Expenditure on what is somewhat misleadingly called the “social sector†—health, education, nutrition, etc.—has certainly gone up in India. And yet India is still well behind China in many of these fields. For example, government expenditure on health care in China is nearly five times that in India. China does, of course, have a larger population and a higher per capita income than India, but even in relative terms, while the Chinese government spends nearly 2 percent of GDP (1.9 percent) on health care, the proportion is only a little above one percent (1.1 percent) in India.
One result of the relatively low allocation of funds to public health care in India is that large numbers of poor people across the country rely on private doctors, many of whom have little medical training. Since health is also a typical example of “asymmetric information,†in which the patients may know very little about what the doctors (or “supposed doctors†) are giving them, even the possibility of fraud and deceit is very large. In a study conducted by the Pratichi Trust—a public interest trust I set up in 1999—we found cases in which the ignorance of poor patients about their condition was exploited so as to make them pay for treatment they didn’t get. This is the result not only of shameful exploitation, but ultimately of the sheer unavailability of public health care in many parts of India. The benefit that we can expect to get from economic growth depends very much on how the public revenue generated by economic growth is expended.
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