A new architecture of economic growth is required

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Need for new architecture of growth

The article highlights the factors to consider in framing the policies for the well being of the people.

Increase in inequality

  • According to a report released by the World Bank, while India’s stock markets rose during the pandemic the number of people who are poor in India with incomes of $2 or less a day is estimated to have increased by 75 million.
  • This accounts for nearly 60% of the global increase in poverty, the report says.
  • The old global economy was very good for migrant capital, which could move around the world at will.
  • The pandemic has revealed that the old economy was not good for migrant workers, however.
  • Their “ease of living” was often sacrificed for capital’s “ease of doing business”.

New strategy for growth

  • India urgently needs a new strategy for growth, founded on new pillars. One is broader progress measures.
  • GDP does not account for vital environmental and social conditions that contribute to human well-being and the sustainability of the planet.
  • According to global assessments, India ranks 120 out of 122 countries in water quality, and 179 out of 180 in air quality.
  • Several frameworks are being developed now to measure what really matters including the health of the environment, and the condition of societies: public services, equal access to opportunities, etc.

Issues with the present frameworks for measurements

  • Most of these frameworks seek to define universally applicable scorecards.
  • The items measured are given the same weightages in all countries to arrive at a single overall number for each country.
  • This ‘scientific’ approach does enable objective rankings of countries.
  • However, as the Happiness Report explains, this ‘objective’ approach misses the point that happiness and well-being are always ‘subjective’.
  • Therefore, countries in which the spirit of community is high, such as the ‘socialist’ countries of Northern Europe, come on top of well-being rankings even when their per capita incomes are not the highest.

Solutions for well being

  • The universal solution for improving well-being is for local communities to work together to find their own solutions.
  • Locals know which factors in the 17 Sustainable Development Goals matter the most to them.
  • Standard global solutions will neither make their conditions better nor make them happier.
  • Therefore, communities must be allowed to, and assisted to, find their own solutions to complex problems.
  • The philosopher Michael J. Sandel says that the ideology of ‘individualism’ justifies indifference to the conditions of those less well off.
  • It denies that societal conditions are responsible for the difficulties poor people have.
  • It also conveniently hides that societal conditions have contributed substantially to the wealth of those well-off.

Consider the question “Rising income inequality in the aftermath of the pandemic points to the need for a new architecture of growth. Discuss.” 

Conclusion

When only some shine, India does not shine. Therefore, the government has to pursue the policies that result in the well being of the majority and not a few.

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