Can Modi balance growth and development?

Amit Khanna
Amit KhannaDec 18, 2014 | 16:13

Can Modi balance growth and development?

The India story seems to be working all right. Whether it is the stock market or the Index of Industrial Production, every other month springs a pleasant surprise. Yet, every other day also brings stories of debt-ridden farmers committing suicides or various other manifestations of depravity. Cheek by jowl skyscrapers and slums are a defining image of metropolitan India. While many of India’s 700 million rural folk are being connected with a modern world, a large number of people are still caught in a quagmire of hunger, disease, and illiteracy. No doubt, India is poised to grow but it begs a question on what will this growth signify in the 21st century? In fact even as India traverses the path of attaining a developed nation status, a similar problem continues to plague many of the less developed economies. How do you grow and develop in a sustainable manner? The United Nations’ the millennium development goals for the 21st century are "to promote poverty reduction, education, maternal health, gender equality, and aim at combating child mortality, AIDS, Ebola and other diseases".


There is no unanimity in deciding what constitutes development. Is it about material improvement of societies or something as intangible as artistic brilliance or moral values? Growth on the other hand, can be described as a process of transformation of life. Whether one examines an economy that is already modern and transformed or an economy at an earlier stage of development, one finds the process of growth is uneven. Economic growth involves increases over time in the volume of a country’s Gross National Product (GNP). Economic historians have attempted to develop a theory of stages through which each economy may pass as it grows. The challenge facing the low-income countries is to move from subsistence levels of per capita income to a level that would generate self-sustaining growth and reduce the gap between themselves and the higher income countries.

Australian economist Colin Clark says development is a process of successive domination by primary - agriculture, secondary - manufacturing and tertiary - trade and services. The American economist WW Rostov on the other hand, says that growth proceeds from a traditional to a transitional one where development takes off. Another important observation is the realisation that productivity is central to changes in living standards. Productivity in this case being the ratio of what is produced to what is required. To maintain the development and growth most economies employ planning. From the post-war-centralised planning emphasising public ownership to the more recent decentralised planning with deregulation and privatisation has been the cornerstone of emerging economies. Then of course, is the trend of increasing internationalisation of economic activity. Ideological battles are also now being fought more in classrooms and internet chat rooms. Sustainable development and the need to improve the quality of life of peoples at large is a shared concern of all nations. The problem is most of the time it remains a mere concern and does not translate into affirmative action.


There is a near consensus that existing private and public organisations must be changed to facilitate development and growth. That wealth generation and its subsequent redistribution is a prerequisite of any sustainable growth. For this the conventional wisdom is economic reforms. Many economists also cite the Laffer's curve (reduced taxes translates into higher revenue) as another requisite for India’s economy.

The impact of population growth impacts economies is now well-accepted fact. India’s demographic dividend is often talked of its great advantage in an otherwise aging world. What does not have unanimity is consideration of conventional criterion of underdevelopment as a tool of measurement for economic growth. A sceptic can turn the whole approach to a reductio ad absurdum by pointing out that even the developed countries with their high and rising per capita income have not been able to solve the subjective problem of discontent and frustration among various sections of society.

On the other hand, this discontent in the developing world internal gap in incomes within individual countries may be more portent than in the international disparity of incomes. Faster economic growth may help to reduce the internal economic disparities in a less painful way but it should be remembered that faster economic growth also tends to introduce greater disruption and the need to make greater readjustments in previous ways of life. Access to income is no guarantee to wellbeing; though it can help if other conditions are met says Nobel laureate Amartya Sen.


Humans in the last century made more progress than they had in the previous 2,000 years. Yet, the disparity in human living conditions is still acute. Is this a failure of intent, endevour or merely reassertion of traditional political hegemony? In a world becoming smaller through scientific advancement is actually creating more distances polemically? We are at that point of inflection in time where a few resolute steps could enable a leap for billions of people from the depths of want, depravity, and helplessness to a life of hope, dignity, and fulfillment. We are undoubtedly, better fed, better clothed, better housed, better informed, better educated than our ancestors but unfortunately even in the 21st century better connected world there are large sections of our planet which are caught in a time warp of less and lesser. What is that can be done to leverage the intellectual might, the financial muscle and political will of a few million so that seven billion humans can enjoy the advent of a new age?

India is on a parabolic growth curve. With its demographic advantage, will it be able to wipe out the abject poverty of the 300 million who subsist below the poverty line? Will India be able to provide basic education, healthcare, food and shelter to its people even as it attracts record investment? As the noted economist, Pareto said many years ago “a society's resources are not optimally allocated as long as it is possible to make at least one person better off while keeping others as well off as before”. The ability to match the growth and development while providing Indians with freedom and dignity is the challenge today.

Will the Modi government be able to achieve this fine balance?

Last updated: December 18, 2014 | 16:13
Please log in
I agree with DailyO's privacy policy