New economic paradigm needed in India to achieve SDGs

The old development model based on economic growth has had its day, and India must choose a new alternative if it is to deliver the Sustainable Development Goals.

Children in India
More than 300 million people in India are denied access to resources that would pull the next generation out of absolute poverty. Time for an economic paradigm shift. Image: Tobias Leeger, CC BY-NC-ND 2.0

A popular TED talk by the founder and promoter of the Social Progress Index, Michael Green, describes the potential for achieving the very ambitious and complex set of 17 Sustainable Development Goals (SDGs) within 15 years without increasing “GDP growth”.

The Social Progress Index is just one of many “development indices” designed in response to a growing disenchantment with “economic growth” as the one-and-only indicator and measure of a society or country’s “development”.

Communities, think tanks and even governments (some of them) across the world are questioning whether economic growth can indeed be the aim and hallmark of a developed society in the same manner as human well-being and environmental quality are.

Unlike measurements of social, cultural, human capacity development and eco-system health; economic development (as an outcome of economic growth) has been reduced to be measured in simplistic quantitative terms resulting from production and service transactions – the “gross domestic product” (and the more the better).

This has made it an easy and therefore popular indicator of ‘overall development’. In fact, attempts to value other development parameters have often been in economic value terms as well. Yet we know, that when economic growth becomes the primary aim of development, human well-being, (especially in an equitable manner) and eco-system health suffer.

The ‘growth’ paradigm that continues to dominate the design of our economies assumes there is adequate ecological capacity to fulfil the demands of the seven billion tending towards 10 billion people in this world and that technology will be the panacea. This paradigm is now passé.

(India’s new economic paradigm) will need to be rooted in the realities of this complex country and based on key fundamentals that put both people and environment at the centre.

The emerging view is that economic activity reflects the interaction of people with each other and with their natural environment, resulting in positive or negative social and environmental outcomes.

It is therefore, necessary to guide, regulate and govern this activity so that just, equitable and sustainable development for all, now and in the future, is achieved. A variety of different approaches exist.

A green growth approach

The green growth approach looks at dynamic economic development as the fuel for societies to thrive, but demands that this development be within ecological limits.

It believes that a country can increase its GDP by exploiting natural capital, but overuse of those resources will reduce national wealth. Natural capital accounting enables smarter planning and decision-making, with in many cases countries choosing to conserve natural capital instead of exploiting it further.

According to this approach, all countries, rich and poor, have opportunities to make their growth greener and more inclusive, reflecting local contexts and preferences.

A critique of this approach is its focus on continued economic growth (GDP) and smarter technological or market methods to ‘green’ this growth. Critics also point out that ascribing monetary value to natural capital make it a tradable commodity that can be ‘exploited or conserved if paid for’. Payment for eco-system conservation would lead to limiting the access of natural resources and therefore to growth opportunities to some (mostly the less powerful). It has also been criticised for not addressing current consumptive lifestyles of the richer nations.

A green economy approach

The green economy (as opposed to green growth) approach has been defined as “one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. It is low carbon, resource efficient, and socially inclusive” (UNEP, 2011). The basic premise of green economy is that there can be a way to eradicate poverty and foster sustainable development without harming the environment.

The strategies for transforming economic processes into green and inclusive require understanding the social and ecological outcomes that must be measured and tracked; greening the current brown production and service sectors through technology and institutional measures; investing in natural systems and human capacity development (especially with a focus of equity of opportunity) and devising financial flows and market structures that facilitate this shift.

A blue economy

The blue economy (not to be confused with the marine economy) is yet another approach.

It argues that it is possible to move from scarcity to abundance through systemic design based on the laws of nature, linking different productive processes, in fact creating new productive processes, using local resources and labour. There is no “waste” in a blue economy conceptualisation and multiple benefit streams add value to local economies resulting in greater human prosperity.

Although this view does not directly address inequities and distributional injustice within capitalist market systems, it relies on localised interventions for system correction and robustness.

Or a circular economy

The circular economy promotes a systemic view of resource use within production processes. It looks at “closing resource loops” to maximise service value generated per unit of resource used, with subsequent recovery and regeneration of products and materials at the end of service life.

This is an alternative to the linear (make – use – dispose) economic growth perspective. This too relies on re-engineering the technological and business model with shifts in consumption patterns driven by shifts in production systems.

A circular economy model need not be localised or decentralised but breaks sectoral silos to focus on efficient resource use and reduced waste. It does not address social equities.

While there are some subtle and some significant differences in the approaches outlined above, what is common is that each looks at economic processes as the means to achieve human prosperity and environmental health and not an end in itself.

And the Indian economy?

What does this mean for India?

A country where one per cent of the population controls over 50 per cent of its total wealth; where over 300 million still live in absolute poverty without access to opportunities that would pull (at least) the next generation out of the abyss; where 65 per cent of population is below 35 years of age – a majority of whom are neither skilled nor employable in the current industrial – market economy; where choice is between an exodus to non-farm jobs and desperate urban living, or continued direct dependence on natural biotic resources, along with the majority, but threatened by social, political and market forces as well as climate change.

We are a country of contrasts – not all desirable. Our economic growth trajectory seen concurrently with our human development track record and state of environment leaves much to be desired. Some say that the elephant may already be too heavy to turn around.

We now have a historic opportunity to address this concern. With the framework for the 2030 Global Agenda for Sustainable Development to guide it, the country is set to design a 15-year National Development Plan – that could turn the juggernaut from a path of disaster to that of sustainable development. Needless to say that the vehicle – our economy will need serious redesign.

Whatever the new or combination of economic approaches that India adopts, one aspect is clear: it will need to be rooted in the realities of this complex country and based on key fundamentals that put both people and environment at the centre.

It will need to be based on the five principles of: system integrity across sectors and resource flows that impact communities and their environment; efficiency and maximisation of service from resources with a zero-waste credo, harmony and balance of natural systems with human needs; sufficiency determinants of resource consumption per capita and, most importantly, universality that ensures equity of opportunity and social justice.

These principles and resultant tangible metrics will need to guide the evolution of new business models, technology applications, fiscal systems and market regulations. Such a blue print will help us track progress of and achieve genuine sustainable development for all.

Zeenat Niazi is vice president of IRF partner Development Alternatives. This article was first published in the International Research Forum.

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