These are the first general elections in the new century. There are signs of a buoyancy in manufacturing which could put the country on a higher growth path. How the economy uses this opportunity, depends on two factors.
One, the foundations already laid or the ground rules already set, and two, the policy choices the country's rulers make. Very little of issue based electioneering will actually take place, but still it is worth focusing on issues which matter in the hope that there will be at least a little bit of debate and informed voting.
To identify the determinants ahead, a key starting point will have to be the country's population. What will the population be a quarter or half century ahead? What will this absolute size mean for the well being of the entirety?
What will this population, with its income and buying power, do to air and water quality? As rapid growth translates into furious urban expansion, what will be the quality of urban services available?
Fortunately the task of identifying the issues, assessing what is likely to happen if policies do not change and what policy choices are available, has been done for us rather well in a recent academic exercise.
Twenty-first Century India: Population, Economy, Human Development, and the Environment edited by Tim Dyson, Robert Cassen and Leela Visaria (OUP, 2004) brings together some of the best in class academic research in this area.
Going by current practices, India's population will be about 1.4 billion by 2026, probably reach 1.5 billion by 2036 and approach 1.6 billion by mid-century. Even a population of 1.7 billion is not inconceivable.
Importantly, Tim Dyson points out that these results assume rather rapid declines in fertility. Under this scenario, the age dependency ratio (proportion of population like the young and aged who depend on others' income) is set to decline significantly in the next 25 years, which is a good thing.
But if India's eventual population is to remain well below 1.6 billion, as opposed to going beyond 1.7 billion, it will involve an appreciably sharper aging of the population during 2026-51. So a policy choice has to be made here. What sort of a decline in the population growth rate do we strive for?
Will there be enough food for this population? Amresh Hanchate and Tim Dyson assess that the country will be able to feed its rising population. But India will still have many undernourished people by 2026, though probably fewer than at the turn of the century.
The cardinal truth is that projected food demand will be met because it will be pitifully low, reflective income levels of the large army of not so well off. To some, whether India can produce the food it needs is a non-issue, as there will be the means to import what falls short.
But a key policy issue which will not go away, in fact raise its head higher over time, is subsidies for rice, wheat, fertilisers and electricity. The combined result of all these subsidies is rotting food mountains and declining soil fertility and ground water levels.
Subsidies should shift to coarse grains cultivation and better ways devised to reach subsidised food to the very poor. These are all indisputably needed policy shifts but which candidate is seriously proposing them?
If the food scenario is not too bleak, the water scenario gives cause for serious concern, shows the study by Bhaskar Vira and others. Water quality has deteriorated owing to pollution and over exploitation of ground water.
Sewage, garbage and waste water have reduced the availability of ground water. A case study of Gujarat shows that increase in drought experience is strongly related to excessive use of ground water.
The water economy of the state is in a shambles because of inappropriate property rights (all the water below my land belongs to me), laws, institutions and rich farmers enriching themselves in a regime of flawed prices and other incentives.
When problems of scarcity can be solved by controlling demand through proper pricing and reducing pollution, policy makers tend to spend public money in raising supply through fresh projects. The key issues are having enough water to grow sufficient food and meet urban demand. With proper institutional support, the Gangetic plains have the necessary water to grow enough food.
To meet urban demand, what is needed is a combination of pricing, regulation of ground water use and management of waste disposal. The policy choice is clear: change the rules or face a two-fold crisis in the future over food and urban livability.
A key issue, energy use and the environment, has been carefully studied by Dennis Anderson. With development and rising incomes, per capita emission rises. But the emission growth rate tapers off and turns negative (per capita emission falls) after a level of income is reached.
Can a poor country pursue growth and control pollution from energy consumption at the same time? Rigorous economic modelling and available technology data is used to show that here can be a win-win situation.
By adopting the right technologies and practices, India can aspire to a greatly improved environment and higher rate of economic growth. Energy is not an exception to this general proposition.
A key factor is rapidly changing technology. A non-polluting technology which was costly a decade earlier may be quite affordable today. What's more, things are getting better all the time.
From a scientific and technological standpoint, there is no reason why India cannot address, in the next two generations or so, problems like acid and particulate matter emission from thermal power plants, disposing of the ash and water produced by such plants, vehicular emission in urban areas, smoke and soil damage caused by using dung and crop residues for domestic fuel. Economic analysis leads to the same results.
By adopting continual environmental improvements while sustaining economic growth, India will have to sacrifice 0.15 to 0.2 percentage points of growth.
Against this, there will be gains like improved health, reduction in river and ground water pollution and improved soil fertility. The choice before the leaders is to go in for the appropriate policies or not.
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