Worrying decline : Assessing economic progress

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Prabhat Patnaik   |   TT  |  04.11.21,  :  How does one judge if there has been economic ‘progress’ in a country? I was once in a conference where the then managing director of the International Monetary Fund, a well-known economist, had lauded India’s post-liberalization economic ‘progress’ by referring to the fact that one had only seen an Ambassador or a Fiat car on Indian roads earlier, but now one could find a whole range of world-class cars.

Few would accept his criterion of ‘progress’. It makes little difference to the overwhelming bulk of the people “whose only contact with a car is when they are hit by one” (as Amartya Sen once put it) whether the affluent have to choose between an Ambassador and a Fiat, or whether they also have access to swanky cars. The usual criterion for judging ‘progress’, growth of per capita gross domestic product, is also a non-starter: one can have high per capita GDP growth in a country where the majority is starving. 

An obvious indicator of economic progress would be if a larger basket of goods and services, deemed essential, can be (though not necessarily is) bought by everybody. Such a basket will include food, education, healthcare, and housing, of which the most essential, of course, is food. Its dire essentiality lies in the fact that (at Indian levels of consumption) the bulk of the people would not reduce food intake in order to have more of some other good in the basket at the going prices. This makes foodgrain absorption a reliable proxy for a household’s real income, and provides a short-cut for assessing economic ‘progress’.

If the per capita foodgrain absorption for the country (measured by ‘net availability’, namely, net output plus net imports minus net additions to government stocks) is declining, then there is certainly economic retrogression; but when per capita availability is increasing, then nothing can be concluded: the rich alone may be cornering more than the increase, not necessarily for direct consumption, but for direct and indirect consumption (the latter through processed foods, and animal products, into which foodgrains enter as feedgrains). Thus, an increase in per capita foodgrain availability is a necessary, but not a sufficient, condition for economic ‘progress’.

This is pertinent for the following reason. The post-Independence period was marked, not just in India but across the third world, by a Statist or a dirigiste strategy, whose objective was to have self-reliant development in the country in relative autonomy from metropolitan capital, for which the development of the public sector was deemed essential; in India, this strategy has been called the Nehruvian or the Nehru-Mahalanobis strategy (though it lasted longer than the life-time of either, indeed until 1991 when economic liberalization was unleashed).

Because of its emphasis on self-reliance and shunning of the hegemony of metropolitan capital, the dirigiste strategy was attacked from its very inception by Western establishments and a growing group of neo-liberal writers. A special target of this attack was the public sector, seen under dirigisme as a bulwark against metropolitan capital and an instrument for developing the country’s natural resources. An extreme form of this attack of late has been the current Central government’s claim that ‘nothing happened in the country for seventy years after independence’.

What can we say about economic progress in the post-Independence period using the criterion of foodgrain absorption? The dirigiste regime reversed the sharp decline in per capita foodgrain availability seen in British India in the last half-century of colonial rule, from 200 kg at the beginning of the twentieth century to below 150 kg at Independence. Availability rose to 180.2 kg for the Indian Union on the eve of economic ‘liberalization’ (annual average for 1989-91). This was still below the level of 1900, but was a big improvement relative to 1947.

From this increase we cannot necessarily infer ‘progress’; but not all the increase was cornered by the well-to-do. Over the period between 1973-74 to 1983, there was a small decline from 56.4 per cent to 56 per cent in the proportion of rural population accessing less than 2,200 calories per person per day, and also a small decline from 60 per cent to 58.8 per cent in the proportion of urban population accessing less than 2,100 calories per person per day. There was clearly no worsening in the nutrition levels of the poor; indeed, there might have been some improvement.

By contrast, the average annual per capita net availability of foodgrains during the neo-liberal era declined from 180.2 kg in the triennium, 1989-91, to 163.8 kg in 2010-12 before recovering to 178.7 kg in 2016-18, just before the pandemic. The proportion of rural population below 2,200 calories per person per day increased from 58 per cent in 1993-94 to a startling 68 per cent in 2011-12. The 2017-18 National Sample Survey figures were reportedly even more startling, because of which the government suppressed them altogether.

Thus, unlike the much-maligned dirigiste period when there might have been some economic progress, the neo-liberal era has seen unambiguous economic retrogression. For those presiding over this retrogression to claim that ‘nothing happened over the previous 70 years’ is supremely ironic.

The same conclusion holds for the third world as a whole. We take as our base year 1961, a rough marker of global decolonization. The per capita cereal output (an approximation for availability) for the entire world in 1961 was around 260 kg. The period, 1961-1980, which largely overlaps with the period of dirigisme, saw an increase to 355 kg (annual average for the triennium, 1979-81). In the triennium, 1999-2001, after neo-liberalism had been dominant for some time, the annual average had come down to 343 kg. This figure has remained unchanged subsequently; since a large proportion of cereals is diverted these days towards bio-fuels production, the amount for human consumption has declined. If the world figure is declining, then one can reasonably assume that the third world would have seen even greater nutritional deprivation.

The neo-liberal period in short, in contrast to the dirigiste one, has been marked by nutritional deprivation and, hence, by economic retrogression, reminiscent of the colonial era.

Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies, Jawaharlal Nehru University, New Delhi