Gurgaon, Jan.17 : Speaking at a session entitled Indices for Development: Need for change at the Partnership Summit organised by CII, Finance Minister P Chidambaram asserted that growth is undoubtedly the most important indicator of development.
Without growth, there is no chance of lifting people out of poverty. He outlined three important consequences of growth: it creates more employment, it generates more opportunities in the hinterland and gives the state more resources to increase social spending, he said further, adding India's experience over the last several years bears out these facts.
Employment generation has increased substantially, infrastructure has been created in the hinterland and the central government has been able to increase its spending on health and education.
In view of these factors, Chidambaram felt that growth should remain the first priority of his government. He was also confident that growth would remain strong given that the key drivers of growth - consumption and investment - remain buoyant. India's savings and investment rates had recently increased, so that an investment to GDP ratio of over 35 percent could be maintained.
Talking about development indicators other than growth, Mr. Chidambaram felt that they are certainly important. Poverty cannot be described just as the absence of income. Equally important are characteristics such as lack of education and healthcare, skills for getting high value employment, no ownership of assets and no access to capital. He pointed out that in the state of Uttar Pradesh one million children do not go to school. These children will be doomed to a life of poverty.
He said that the social well being of the people is better captured by human development indicators such as infant mortality, maternal mortality, literacy, life expectancy at birth and per capita expenditure on health and education. The UNDP's Human Development Report has popularised this approach to development. Dr. Amartya Sen's work in this area, characterising development as an endogenous process, has also gained popularity. It is true that there is no one-to-one correlation between high income and a good quality life. Equally, there is no trade-off between economic growth and positive social outcomes.
In response to a question on the slow rate of growth in agriculture, Chidambaram said that while the medium term objective is to increase government spending on health and sanitation in rural areas, in the longer term, more people have to be weaned away from agriculture. We do not need to have 65 million people engaged in agriculture in order to produce food for one billion people.
Introducing the session, Mr. Seshasayee, Past President, CII and Managing Director, Ashok Leyland said that while India had been fairly successful in pursuing strong growth, there are questions about whether the growth experience has been inclusive.