Monday, May 27, 2024

India’s economic paradox: Beyond GDP rankings to socioeconomic realities

Photo by Ishant Mishra on Unsplash

Dr Shirin Akhter & Dr Vijender Singh Chauhan

Even as we wonder what gives the ruling party the confidence to cut down the social sector budget in the election year, we are bombarded with news of India’s journey to being the world’s fifth-largest economy. This narrative offers a stark contrast to the lived experiences of its vast population. The much-advertised economic growth coexists with persistent and deepening inequalities. This dichotomy not only reflects an economic narrative of selective prosperity but also showcases the broader social injustices that permeate the nation. Despite impressive strides in GDP rankings; rising from the 10th to the 5th position globally over the last decade, the per capita prosperity remains almost where it was a decade ago, alarmingly low, at 136th, with the widening income gaps

This article looks beyond the façade of economic growth, into the paradoxical nature of India’s economic trajectory. Despite soaring GDP rankings, the stark reality of widening inequalities and stagnating per capita prosperity shows the hidden side of the country’s socio-economic landscape. The article unravels the complexities of India’s economic dichotomy, by analysing some prominent social sector indices, exploring the possible reasons behind their dip and exploring the differential impacts of this dip. The article winds up with a call for urgent inclusive policies and equitable growth strategies.

The past decade has witnessed a striking rise in the number of billionaires, a phenomenon that highlights the disproportionate benefits of economic growth. This surge in extreme wealth, amid widespread economic liberalisation, has exacerbated the wealth gap and brought about substantial social costs. The creation of billionaires correlates with increased monopolisation in key sectors, reduced competition, and the exploitation of labour, limiting opportunities for smaller enterprises and stifling upward mobility for the lower and middle classes. Moreover, this concentration of wealth diverts resources from critical public services such as education and healthcare, which are essential for equitable social progress.

This inequitable distribution of resources not only marks significant economic inequality but also raises important questions about the social, economic, and political implications of such a distribution. Education and healthcare, two fundamental pillars for equitable development, remain inaccessible to many, as evidenced by the stagnation in social indices like the Human Development Index. Modest improvements in the HDI are shadowed by volatile conditions that reveal reduced life expectancy and education levels. Furthermore, the optimistic claims of eliminating extreme poverty, clash with critiques about outdated methodologies and the absence of recent comprehensive data, suggesting a glossing over of the underlying issues.

Though the Gender Inequality Index (GII) shows some progress, but it masks the significant gender gaps in labour force participation. Similarly alarming is India’s ranking in the Global Hunger Index (GHI), where it stands at 111 out of 125 countries, reflecting a ‘serious’ level of hunger, exacerbated by global crises that threaten food security. Despite governmental critiques of the GHI methodology, the reality of widespread undernutrition cannot be ignored, especially when the incumbent government itself promises free food to 80 crores of the population as a part of its electoral mandate. Similarly, the Worldwide Governance Indicators (WGI) and the Academic Freedom Index (AFI) depict a concerning trend of declining governance quality and academic freedom. 

Notably, these declines are not merely numerical values but are indicative of broader restrictions that stifle innovation and suppress critical voices essential for a democratic society. The sharp fall in the World Press Freedom Index, where India now ranks 161 out of 180 countries, is particularly distressing. This decline highlights the growing challenges journalists face from both governmental and non-governmental pressures, in fulfilling the roles and responsibility of media, impairing a cornerstone of democracy. The Social Mobility Index further reveals severe disparities, hinting at unequal opportunities and access to resources which are crucial for upward social movement, indicating that a child born to poor parents is doomed to a life of poverty with almost no chances of reaching the higher income levels. The World Bank indicates several generations would pass before a child born in penury reaches the national average income in India.  

The dynamics of India’s social indices can largely be traced to how economic growth and social welfare are interconnected, often resulting in unequal impacts across different social strata. As social indicators decline, the impact is most acutely felt by the vulnerable and economically weaker sections of society, who are less equipped to shield themselves from the adverse effects of these downturns. Conversely, as economic growth increases, it tends to disproportionately benefit the affluent, thereby amplifying wealth disparities and further entrenching the socio-economic divide. This uneven distribution of economic gains not only restricts access to essential services such as education and healthcare for the underprivileged but also exacerbates existing social inequalities. The interplay between rising economic indices and falling social metrics highlights a critical imbalance where progress benefits the few while the majority face stagnation or regression in their quality of life.

Further, it is crucial to understand that these metrics can not be viewed in isolation. The decline in each of these indices signals a broader trend of eroding social conditions and governance that collectively contribute to a challenging environment for sustainable development and democratic governance. The interplay among these indices reveals systemic issues that exacerbate inequalities and restrict social mobility, defining the interconnected nature of economic, social, and political challenges in India. Policy and governance issues such as inefficiencies in policy formulation and execution, corruption, and inadequate regulatory frameworks lead to poor governance, causing ineffective utilisation of resources and poor implementation of social welfare programs further augmenting the disparities. The urban-rural divide also complicates matters, as the disparity in infrastructure, resources, and opportunities between urban and rural areas leads to uneven development. 

Compounding these issues are deep-seated biases based on caste, gender, religion, and ethnicity, which continue to restrict access to resources and opportunities for various segments of the population. Unless governments actively discourage discrimination based on factors like race, gender, religion, or ethnicity, they end up creating an environment where certain groups are systematically marginalized and oppressed. One of the most significant impacts of state-sponsored discrimination is its detrimental effect on social indices. These indices, which measure various aspects of societal well-being such as education, healthcare, income equality, and overall quality of life, inevitably suffer when a significant portion of the population is unfairly treated and denied equal opportunities. 

Let’s take a few examples, if certain groups are discriminated against in educational policies, denied access to quality education, or subjected to bias in the classroom, it leads to a stark disparity in educational outcomes. This, in turn, perpetuates cycles of poverty, limits social mobility, and contributes to a widening gap between the privileged and the marginalized. Healthcare is another area profoundly impacted by state-sponsored discrimination. When certain communities face barriers in accessing healthcare services, either due to economic discrimination or systemic biases within the healthcare system, it results in poorer health outcomes, higher mortality and morbidity rates, and a decreased ability to earn. Income inequality, too, is exacerbated by discriminatory practices endorsed or allowed by the state. 

When certain groups are denied equal rights, and employment opportunities, paid less for the same work, or excluded from economic advancement programs, it leads to a concentration of wealth and power in the hands of a privileged few, while others languish in poverty and deprivation. Furthermore, such discrimination fosters a culture of exclusion and division, eroding social cohesion and trust among different segments of society. This not only hampers collective progress but also breeds resentment, conflict, and instability, ultimately undermining the foundation of a healthy and thriving society. Understanding these factors as part of a combined framework allows for a more holistic approach to addressing the root causes behind the decline in multiple social indices, paving the way for targeted interventions that can lead to sustainable improvements across the board. 

In conclusion, India’s journey towards becoming a global economic powerhouse must be navigated with an acute awareness of its internal disparities. The path forward lies not just in celebrating GDP milestones but in earnestly tackling the per capita realities and ensuring that prosperity is shared across every stratum of society. The resolution of these disparities is essential for securing a harmonious and prosperous future for all Indians. As India advances as a global economic power, it must also introspect on the internal disparities that threaten to undermine its achievements. The challenge lies in transforming economic growth into a more inclusive phenomenon, where prosperity is not reserved for the top echelon but is shared equitably across all levels of society. This is not just an economic imperative but a moral one, essential for sustaining the country’s social fabric and democratic values in the long run.

Dr Shirin Akhter & Dr Vijender Singh Chauhan are Associate Professors at Zakir Husain Delhi College, University of Delhi.

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