Showing posts with label Gini coefficient. Show all posts
Showing posts with label Gini coefficient. Show all posts

Tuesday, August 18, 2015

MUSINGS FROM PRIYADARSHINI KARVE: The earth has overshot... how do we survive?

On 13 August, I read several news reports that this was Earth Overshoot Day for 2015. What this meant is that the resources that were supposed to be used over the entire year of 2015, were finished up in less than 8 months. So for the next four months of the year, we will be using resources that are meant for the next year. As a result, the resources for 2016, will be finished a bit earlier.. This is a direct consequence of humanity's ecological footprint being more than the total area of the earth. I talked about this in the very first MUSINGS way back in March. 

If we do not take these global warnings seriously, by the middle of the century, we would be starting a new year with zero balance of resources! In practice, what this means is that scarcities of all natural resources will all the time be hitting us! For some time, the rich and powerful will be able to hoard resources and somehow continue to live a better life, but even that will soon be difficult to sustain. At that point then irrespective of our monetary bank balance, we will all be forced to live frugally, because there will be nothing left to purchase using the pieces of paper called currency! 

Let's forget about the world, and focus on our own country! 

India's ecological footprint has always been greater than our ability to regenerate resources. In recent years, our ecological footprint has been shooting up as we have prospered economically. Part of the reason for these shortfalls is our high population density - number of people dependent per unit area of land and water is high. But we are still 'managing' in spite of the shortfalls because we can still import resources from elsewhere in the world, and fill the deficit. 

Our sense that we are self sufficient in something or other is often a false sense of security. Take the example of what was once lauded as our biggest success story - the green revolution which allowed us to successfully feed our entire population without food imports. However, in order to increase the farm productivity to that level we had to import petroleum (to make the chemical fertilizers) and pesticides and hybrid seeds, which cost us much more than direct import of food! As the cost of agricultural inputs shot up, in spite of the increase in yields, farmers' profit margins disappeared, pushing farmers into debt and despair. And in spite of all this, for the last few years, we are again having to import food grains, because the artificially pumped up agricultural yields have now started dropping due to loss of soil fertility! This was indeed a path of development that was non equitable as it enriched the traders at the cost of the farmers, and it has now proved to be unsustainable too! 

So, we will have to import one or the other of the resources, because our consumption as a nation is more than what we can generate on land and water within our political boundary. In fact the more we prosper economically, the better equipped we will be to keep filling the shortfall with imports... never mind that the shortfall will continue to grow the more we prosper! But import will solve our problems, as long as there are resources somewhere to import from! As the entire world starts running out of resources, where does that leave us??

There is another aspect to this problem. Last week I talked about the Gini Coefficient, which clearly shows that while the economy has boomed, the economic inequality has also increased. This means that the additional burden on the ecological resources in recent years is mostly due to the increased consumption of the richer sections of our society, while the poorer sections are not getting opportunities to come out of poverty. As resource scarcities are mounting, the first hit will also be the poor, rather than the rich. 

The pursuit of development thus can create islands of prosperity, but how are we going to sustain them? The social tensions arising out of the ire of the deprived will increasingly threaten the security of these islands. At the same time, as the resources on which these islands depend dwindle, the cost of the prosperity will keep on escalating. How long can we then maintain this facade of prosperity?


It would indeed be wise, if we choose a path of development that may be slow, but is equitable. I saw a beautiful cartoon a few years ago that very well explains what 'true' equity means, so I would rather reproduce that here, than use words! 






Along with true equity, we will also have to seek true sustainability - a path that will not depend heavily on non-renewable resources, AND will keep our rate of consumption in resonance with the rate of regeneration of resources. 

The earlier we make this transition voluntarily, the better equipped we will be to live in a warmer and a relatively barren world! 


#BeModernBeResponsibleBeRespectful
    Samuchit Enviro Tech.     samuchit@samuchit.com     www.samuchit.com

Tuesday, August 11, 2015

MUSINGS FROM PRIYADARSHINI KARVE: Can higher GDP be the ultimate goal of 'development'?

Everywhere I turn, nowadays I hear about the need to increase GDP, or rate of growth of GDP. Should GDP - Gross Domestic Product - be the ultimate goal of development?


What is GDP, by the way??

The monetary value of all the finished goods and services produced within a country borders in a specific time period is defined as Gross Domestic Product or GDP. Typically, it is calculated on an annual basis. It is important to understand the tacit assumption here - that all goods and services being produced and transacted are being recorded! Can you truly say that is the case in India? 

Picture this - I grow some vegetables in my garden, and sell them to my neighbours. Or I use some discarded CDs to make a solar cooker and sell it. (How to make a solar cooker using discarded CDs? Google might know, if you don't!) How are such transactions getting captured in the GDP calculation? And what about all the 'black money'? 

So, ok, possibly GDP is an UNDER-estimate of the wealth being generated in the country. But that is actually good, right? Whatever is our calculated GDP growth rate, we must be actually doing better than that! So we are prospering more than whatever we are measuring! That is cause for celebration, isn't it?

Indeed, that would not be a problem, if someone can show me the correlation between this abstract number and the quality of life of the entire population. I mean think about it. Today we have some 270 million people living under poverty line. At the same time we have some 400 thousand millionaires. If these millionaires became billionaires, I am sure the GDP will show a hike. But how much of this wealth is going to trickle down to the the 270 million BPL? 

The GDP as a stand alone number cannot represent 'development'. It has to be accompanied by another number, which also shows how much economic inequality still exists in the country. True development will happen if this second number goes down while the GDP goes up. 

Is there any such indicator? Of course, there is, and it is called the Gini Coefficient. I bet not many of you ever heard about this one! It is one Ginny that most politicians across the world would never let out of the bottle! The GIni Coefficient varies between 0 (perfect equality) and 1 (total inequality). So what is the Gini Coefficient of India and how has it varied with time? 
Source: https://upload.wikimedia.org/wikipedia/commons/thumb/0/01/Gini_since_WWII.svg/2000px-Gini_since_WWII.svg.png

India's Gini coefficient seems have zigzagged a bit over time, but has remained above 0.3. The graph does look a bit complex with all the lines bunched together in the middle, but you can see where we stand with respect to other nations in the world. 

If you follow the line for India in this graph, you will find that since 1990, when our economy opened up, our Gini coefficient has steadily gone up towards 0.4! 

Surely, this must be a co-incidence? What do you think?


Priyadarshini Karve
Director
Samuchit Enviro Tech




#BeModernBeResponsibleBeRespectful

    Samuchit Enviro Tech.     samuchit@samuchit.com     www.samuchit.com