India’s GDP growth has slumped to 4.5%. Consumption levels have reduced for the first time in 40 years. The economy seems adrift, though the government is trying to assure investors and citizens that this will pass soon. Its credibility is very low when it asks them not to trust the data about growth, consumption, and employment produced by national agencies. Who would have faith in a pilot who tells passengers not to worry when there is a storm raging and all his navigational instruments have failed?
India needs a new vision for its economy. The statist model followed for the first 40 years after Independence did not deliver. The opening to markets along with the muddled retreat of government from the economy, in the next 30 years, has not delivered either. India needs another vision to spur inclusive and environmentally sustainable growth.
That all was not well was known even in the heady days of India Shining at the turn of the millennium, though headline numbers of GDP growth would not reveal this. One had to look within by listening to diverse people and looking for facts on the ground. A large, inclusive, process of scenario building in 2000, looked at India’s economy holistically. Since the process was systemic and broad, it could not have numbers for all the facts. Nevertheless, many realities were included in the model of the system, even if not quantifiable, to make it complete. The question, that the hundreds of diverse citizens explored together, was: Is there a third, and better way for India’s growth.
The model predicted three scenarios for India’s progress. Each was predicated on a different model of economic governance. Likely growth rates and patterns of inclusion within each model were outlined. Each scenario was summarised in a picture—because a picture can say more than a thousand words. A similar, broad-based, scenario exercise was conducted again in 2013, alongside the preparation of India’s 12th Five Year Plan. By then, though India had enjoyed many years of high GDP growth, concern about inclusion and environmental sustainability had become greater. This time NCAER assisted the Planning Commission to put some numbers onto the three scenarios that emerged.
The two sets of scenarios—in 2000 and 2013, though produced by different groups of people thirteen years apart, were uncannily similar. As perhaps one would expect from an analysis of deeper structures of the economy, rather than assessments from streams of numbers, which squiggle around and cannot look into the economy’s fundamentals, such as stock market indices or even the GDP.
The scenarios’ pictures reveal the structure of the economy. One scenario showed a peacock strutting in the centre with little birds scrambling for grain around it. Markets are opened by governments with the hope that all citizens will benefit from the opportunities that will be available to everyone. However, the first to benefit from the opportunities will be those who have some assets already—wealth, education, and access to political power. Thus, they grow richer and more powerful. Gaps between the rich and poor increase though the economy grows overall. Not surprisingly, inequalities in wealth have increased in all countries since the 1990s with the push back against governments and with more ‘ease of doing business’.
The second scenario showed a fall-back towards over-control by government. This is a temptation when a third way is not visible. The picture of this scenario was buffaloes wallowing in a pond while children are waiting outside. The buffaloes are the big leaders and experts on top devising policies for the people. The children are waiting for improvements in their education, nutrition, and healthcare. Actually this picture is not merely a fall-back to big government. It is also a commentary on solutions by macro-economists for people whose lives they do not really understand. (In fact, this is the picture that Abhijit Banerjee and Esther Duflo describe in their commentary on economics in Good Economics for Hard Times—Better Answers to Our Biggest Problems, as well as Joseph Stiglitz, Jean-Paul Fitoussi, and Martine Durand in Measuring What Counts: The Global Movement for Well-Being.)
This is the story of India’s economy. India’s human development indicators continue to lag behind much poorer countries. Moreover, India’s millions of youth are not finding decent opportunities to earn adequate incomes. Their frustrations are spilling into violence—even robberies and rapes. They have become fodder for political agitations—for stoning and lynching.
The third scenario shows millions of little fireflies rising up. They have their own lights. As they rise together, they change a picture of darkness to light. This is a picture of bottom-up growth and mass entrepreneurship. Some are business entrepreneurs. Others are social entrepreneurs working on societal issues. Cooperatively, they power up a movement for all-round change. Uncannily, this was the vision of Mahatma Gandhi’s “Constructive Programme” too. In his Foreword to the enlarged edition that he published in 1945, he wrote: “The constructive programme is designed to build the nation bottom-up”. This approach, he said, “means the decentralization of the production and distribution of the necessities of life”. “Constructive work” will improve livelihoods and incomes at the bottom, Gandhiji explained.
When the NCAER projected growth rates for the three scenarios, they found, not surprisingly, that the pace of inclusion was much faster with the ‘fireflies’ scenario than the ‘peacocks’ or ‘buffaloes’ scenarios. Moreover, overall GDP growth was also 2% to 3% higher.
India’s political configurations should not find it difficult to agree on a bottom-up vision for the growth of the Indian economy. The RSS and its’ affiliates want a strong ‘swadeshi’ economy. (Hence they are accused of being protectionists). The Left parties want more growth at the bottom, not the top. The Congress under Nehru had detoured towards the large state and ‘commanding heights’ model. However, the Congress too can rightfully lay claim to Gandhi’s vision of bottom-up growth. Which is the urgent need for India.