Measure of success should go beyond GDP

Written by SATHYA RAGHU V MOKKAPATI via The Hindu Business Line on 8/29/2018

Once again, GDP makes the maximum noise in the news headlines. A back-series data released last week showed that GDP of India grew at double-digts during the UPA regime. The National Statistics Commission (NSC) dismissed the same saying that methodology for back-casting GDP series has not yet been finalised and various alternative methods are being explored.

As always, GDP is used as the narrative to argue how well the economy was handled. How appropriate is this narrative of measuring the world from the lens of GDP?

Not the only measure

The gross domestic product (GDP) is celebrated worldwide. The International Monetary Fund (IMF) recently reported that India continues to be the fastest growing economy, with expected growth rate of 7.3 per cent for the current year and 7.5 per cent for the next. Indian agriculture contributes about 16 per cent to India’s GDP by employing nearly half of the working population. This keeps triggering debate about the need to reduce focus from agriculture and to increase the same on industry and service sectors, which gets reflected in the Budget allocations too.

The narrative here is that GDP is the proxy of progress. An increased share of agriculture to GDP does not necessarily mean that farmers will have a better tomorrow. But if farmers have increased disposable income, then the overall well-being of the planet can improve, given that 80 per cent of the small and marginal farmers across the world are poor.

Shortfalls in GDP

Rural India is much happier than urban India. The degree of their contentment, the amount of celebration, the way they socialise and treat the entire village as a family can give great lessons for those in urban areas. Does GDP capture this? No!

There might be two paddy growing farmers, who help each other in their sowing activity by lending free labour, which is outside the purview of GDP calculation. Their overall well-being does not have any place in GDP. It would have been fine if GDP were one of the indicators than being the ‘real’ and absolute indicator of growth.

While GDP is celebrated so much, there’s also an ugly side. Increasing GDP of agriculture can happen with absolutely no increase in the farmer’s income or their well-being. If the amount of fertilisers and pesticides sold increases, GDP increases. If the transport and logistics for agri-produce increase, GDP increases. If the loans given and interest earned by banks increase, GDP increases. Do any of these mean that there really is an improvement in the lives of farmers? Absolutely not. How do we really get to celebrate true success: the well-being of humans?

What should change?

Can we start quantifying and celebrating impact more honestly? Can there be an index of organisations that impact the maximum number of lives with employment and livelihoods? In the era of Artificial Intelligence and Machine Learning where people talk about how people can be replaced with machines, we certainly need to find ways to measure this and celebrate those who focus on giving their fellow humans jobs.

Should the biggest measure of success be the livelihoods created rather than the dollar value of market capitalisation?

Agriculture as game-changer

Agriculture is a great livelihood provider. While the service sector is showing signs of stiffness in employment and manufacturing is increasingly getting mechanised and automated, the sector which still has the potential to create jobs is agriculture. While today, the agriculture sector is largely underemployed and inefficient, with the right practices, the same amount of food can probably be grown with half the people working.

But, by consciously developing rural enterprises, nurturing them and celebrating their success, we can possibly gainfully employ more of the population in agri-value-chain activities. It is imperative that small farmers get end-to-end support in farming and post-harvest management with the right people and physical infrastructure backing them. All this can happen when we measure our success beyond GDP and market capitalisation.

We need to revisit the way we measure success, progress and happiness individually and how we evaluate each at the country level. Prices can’t be proxy for everything. Inequality needs to be addressed. Well-being should be prioritised. Carbon emissions should come down. This thinking impacts the narratives that we build, which in turn impacts our actions.

The writer is co-founder and the president of Kheyti, an agri-tech startup based in India.