THE LIMITS TO GROWTH REVISITED

by Jairam Ramesh
Minister of State (Independent Charge) Environment and Forests, Government of India

Convocation Address delivered at Tata Institute of Social Sciences

Mumbai May 11th 2010

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operations research. that I must confess appears so naive. Paul Ehrlich’s The Population Bomb in 1968 and Indira Gandhi’s famous 2 . This was a time when I believed that management science broadly defined to include game theory. My own paper. I remember the redoubtable Dr. M. so theoretical and so unrealistic in retrospect. The Limits to Growth was. My intellectual pursuits subsequently went in other directions but today almost 37 years later I wish to return to another theme made extraordinarily popular by Meadows and his team which is relevant to my current ministerial preoccupations. A number of distinguished men and women. some of you might recall. Dennis Meadows and their colleagues at MIT. It is a particular privilege to be invited to the convocation being held in the Platinum Jubilee year of your Institute. Parasuraman first approached me.S.will I be asked to wear the awful attire normally associated with convocations? On being re-assured that TISS follows a saner and more civilised dress code. have been at such functions in the past and I am not sure what I have done to be included in this galaxy. I cannot but help recall that I first came here in December 1974 to attend a seminar on urban planning. including Prime Ministers.I. I readily agreed to be with you today. I am delighted to be back in this beautiful campus. Gore being present. the title of a highly influential book written by Dennis Meadows and his colleagues that hit the headlines in 1972. I had just one question—one that has become somewhat of a habit now -. When Dr. systems analysis and the like held the keys to all problems of public policy. My friend Tariq Banuri the Pakistani economist told me last year that that the release of this study was one of four seminal events to have decisively shaped the modern global discourse on environmental issues-the other three being the publication of Rachel Carson’s Silent Spring in 1962. was based on my bachelor’s thesis at nearby IIT on urban modelling based on the then-fashionable systems dynamics approach developed by Jay Forrester.

finding answers that will be politically acceptable and also carry conviction with the expanding consumerist classes in our country will be very difficult. But let me straightaway admit that while posing the question is easy. To give a very obvious example. The question I want to ask today in the Indian context is whether we should even worry about the limits to growth. we are all agreed that public transportation must get over-riding priority but are we. The Planning Commission is setting a target of 9%+ growth rate for the 12th Five Year Plan that commences in April 2012. the Indian economy has averaged an annual rate of real GDP growth of 8. Anyway.speech to the first UN Conference on the Human Environment at Stockholm in June 1972. It is a good time to ask this question. why do I say it is a good time to at least pose this question of limits to growth? Between 2003/04 and 2010/11. II. individually and collectively. I know many social scientists knock the idea of GDP growth as a measure of progress and even some Nobel Prizewinning economists like Amartya Sen himself and Joe Stiglitz have written eloquently on the need to shed our obsession with high GDP growth as presently defined. about the limits to sustained high growth.5%. the fact remains that GDP growth is the most convenient and most widely used single index of the dynamism of a country’s agricultural. But while we must acknowledge its limitations as a measure of progress and welfare. prepared to accept the fact that the rate of growth of car ownership in our country that is following in the footsteps of that in the USA and China is a recipe for disaster? Are we prepared to change our consumption behaviour? I suspect we are not. 3 . or more precisely. an unprecedented achievement. industrial and services sectors.

And this is that we are talking of compound growth rates. And that is because of the need to avoid penalties imposed by financial markets on economies. will increase by just about 15 million over the same period. current account deficit and public debt numbers look manageable and we avoid either substantial downgrading of credit ratings or substantial capital outflows. Let us not forget that the Mahatma Gandhi National Rural Employment Guarantee Act which is today the world’s largest social safety net programme would simply not have been possible without the proceeds that the growth process generates. An economy growing at 5% per year will double in 14 years and quadruple in 28 years. And it is growth alone that will create the jobs and give us the resources to invest in skill-development so essential to reap the “demographic dividend”. our fiscal deficit. by contrast. the power of compounding should not be devalued. There is yet another reason why we need to sustain high GDP growth rates. With high GDP growth rates. Let me also recall here a simple calculation often ignored by critics of GDP growth as the index of economic performance. When international comparisons have acquired importance and when high GDP growth has strategic consequences as well for India especially vis-avis our neighbours. Crucial macroeconomic indicators that are tracked by markets worldwide look 4 . particularly by non-economists.I entirely agree that we should not be overly obsessed with high GDP growth but neither should we ignore its criticality particularly as an instrument to create more jobs and to generate more revenues for the government to invest in both infrastructure and social welfare programmes. An economy growing at 9% per year will double in roughly 8 years and quadruple in 16 years. Let us also not run away from the stark reality that over the next decade India’s labour force will increase by anywhere between 80 million and 110 million—an astoundingly staggering number—China’s labour force.

this was one theme running through the original Club of Rome study but over the years we seem to have lost sight of it. I would suggest that the time has now come for India to look at the limits to growth not just from a macroeconomic point of view but also from an ecological point of view. There are those who believe that high inflation is an inevitable price we have to pay in the short-term for high growth while there is now a consensus view emerging that high inflation now is a barrier to high growth in the medium-term and thus needs to be tackled boldly. But we do ourselves no favour if we don’t even try to pose the limits to growth question from an ecological perspective and then try to assess what the 9%+ growth 5 . debt:GDP ratio. Of late. the Planning Commission has worried about the fiscal limits to growth. Incidentally. should have been articulated forcefully much earlier. Where will the limits to growth emanate from? For decades. tax:GDP ratio. Incidentally. fiscal and current account deficits to name some of the more prominent of them. We do not have to subscribe to the apocalyptic vision of the Club of Rome because over the past three decades technology has undermined many of the its predictions—the most famous of which being we will run out of oil by the turn of the 20th century. the Planning Commission has always focussed on macro-variables— for instance.good in India when judged against the backdrop of high GDP growth rates— otherwise. technology has also made nonsense of the dire predictions made in the 1960s about India becoming a food basket case. we could be in serious trouble. III. In the debate on what we can or cannot achieve. there has been a great deal of discussion on inflation and its impact on growth. savings and investment rates. in my opinion. The recent decision of the Reserve Bank of India (RBI) to hike interest rates is a powerful reflection of this new view which.

We have been guilty of neglecting these effects. the public health effects of development paths followed over the past have become visible—whether it be the growth of cancer in Bhatinda. whether it be campaigns like the one launched almost four decades ago by women in the hills of Uttarakhand that was immortalised in history as the Chipko movement or whether it be agitations like the one launched by the Narmada Bachao Andolan that was spearheaded by a feisty TISS alumni who continues to make life uncomfortable for me I might add. Third.means for our water resources. grow and then deal with its ecological consequences? Can’t we follow the American or even Chinese approach of “harness growth gains now. in Banaskantha. by the illeffects of air and water pollution. ecology in our country is not just a matter of lifestyles as it is in the developed countries but of basic livelihoods—whether it be the protests in Lanjigarh. But why now particularly? Can’t we wait for a decade. the impacts of ecological damage on environment are better understood today than at any time in history. First. It is entirely possible that the increased health expenditures are being caused. in Srikakulam or just a couple of days back in Aligarh. which help give us a much better idea today of how much ecological damage is being caused by the conventional growth process than ever before in 6 . our forest wealth and indeed for our entire and very variegated and rich biodiversity. the impact of Endosulphan in Kasargode or the incidence of respiratory diseases in Chandrapur. There are many reasons why India has to be different. in part at least. A whole science of ecosystem valuation and “green” national accounting (a theme to which I will return later) have emerged. already. Health expenditures both in urban and rural India are on the rise and are adding to the indebtedness of poor households especially. Second. bear growth pains later”? IV.

there is the stark reality that India will add another 400-500 million people by the middle of this century. but its “Adjusted Net Saving” in the same year was 24.the past.3% in 2008. the difference arising due to the depletion of natural resources and pollution related damages. in addition to conventionally measured depreciation of the nation’s capital assets. while it has been said that China faces the prospect of becoming old before becoming rich like the West. climate change is a reality and India will be profoundly impacted by it in multiple dimensions like no other country whether it be through (i) effects on the behaviour of the monsoon which retains its centrality as a determinant of agricultural performance. India’s Gross National Savings as a percent of GDP was around 34. Many advanced countries confront population declines. Just as an example. And sustainable development. (iii) on the rise of mean sea levels that directly impacts on the livelihoods of at least 7 million fishermen and their families apart from the million who live in coastal areas in thirteen states along a 7500 km coastline. coal. is development that “ meets the needs of the present generation without compromising the ability of future generations to meet their own needs”. according to the World Bank data. 7 . Finally. In the face of such rising and credible evidence. we cannot ignore the ecological cost of the growth process. of course. (ii) on the health of the Himalayan glaciers which affects the water security for almost half a billion people living in the Ganga basin. Global warming threatens humanity as a whole but India stands out in terms of its vulnerabilities in diverse ways.2%. But the demographic momentum in its magnitude certainly is unique to India. especially iron ore. after all. Fourth. Several other such assessments show similar results. and on our forest cover which is home to India’s considerable mineral wealth. bauxite and.

because we are a late-comer to the sustained high GDP growth rate club and being a late-comer means you don’t have to necessarily repeat the horrendous mistakes others have made. Of course. this is not the only impact. Economic growth requires energy to fuel it. for our schools and hospitals. for our factories and offices. If we accept that we need to be different because of these five reasons I have just outlined. But today I will focus on the energy sector alone. This in turn requires that resources be extracted from nature or the environment to manufacture goods. Expanding urbanisation will add to the damage to our already polluted rivers— which are more sewers actually. It is. provide services and create capital. And past trends are not always 8 . since we are in a frenzy to make up for lost time and since a large section of our population will be impacted by ecological compromises that a sustained high growth would demand. therefore. A 9%+ rate of growth. It is essential that we ask this question. incidentally. then let us move ahead and go back to the original question— what the ecological limits to sustained high growth? It is a question that we can both afford to and must ask. more pointedly. will require a 7% rate of growth in electricity consumption. Growth requires energy or.V. We don’t have to believe in Lenin’s famous equation—Soviet power plus electricity equals Communism” to grasp the absolute criticality of electricity for our homes. calculations based on past trend reveals. High GDP growth coming from high manufacturing growth will lead to air and water pollution. it requires electricity. In my view most fundamentally we must understand what sustained high growth means for the energy sector. crucial to understand the implications of high growth and its limits in terms of energy. High growth will generate huge solid waste that will have to be managed in a better fashion than we have done so far. We can afford to ask this question. for our farms.

7 billion by the middle of the century can fulfil the economic aspirations of its people only or even very substantially through efficiency improvements and renewables. The use of new supercritical and ultra-supercritical technology in coalbased power generation will lead to higher efficiency in coal utilisation necessitating lower use of coal. Now. Here is a depressing statistic that illustrates the magnitude of the challenge ahead—more than half. Aggregate technical and commercial losses in power distribution. important as they definitely are. Mandatory fuel efficiency standards in the automotive sector is an idea whose time has come and I am glad to say that they are being finally notified in the next few days although they will be mandatory only from 2015 onward. wind and biomass whereas our installed capacity in these areas is less than 8000 Mw. of rural households are without electricity.reliable since it is well known that there is both considerable suppressed demand and a huge backlog of basic demand itself that has to be met. renewable will 9 . But the question is whether a nation of 1. Recently. This translates into a population of close to 400 million. for the country as a whole are over 30% whereas it should be no more than 1015% at most. Where will this electricity come from? Many environmentalists argue for giving primacy to energy efficiency and renewable. Definitely in the short-run. My own sense. for instance. after over a quarter of century of involvement and experience in the energy sector is that the answer to this question is “no”.2 billion and a country that will be 1. in a cost-competitive manner.61.000 MW of power capacity through renewable like solar. up to 60. around 56%. nobody can really argue against energy efficiency and renewables. the World Bank has published a detailed report that India can harness.

have to depend on largely on coal. up from the present 10 . will. Chattisgarh and Orissa. or the negative impact on river biodiversity in run-ofriver projects. But substantial coal reserves that will need to be worked upon in the future to increase coal production are located in the rich forest areas of Jharkhand. How much coal do we produce and how much of these natural forests we protect is a choice that confronts us today. largely on account of the absence of a commercially viable model for renewable energy. Nuclear power is a third option but under the most optimistic scenario cannot contribute more than 5-6% of electricity supply by 2020. Coal-based power can certainly expand since we have the world’s third largest reserves of coal. solar. presents its own share of ecological headaches whether it is the submerging of large tracts of forest lands for big reservoir-based dams. albeit of relatively poor quality as judged by its high ash content.have a limited role in the energy basket. hydel and nuclear power. clean as it may seem. India will run out of coal in 45 years. But new hydel sites are the subject of inter-state river disputes or are located in a few states like Arunachal Pradesh. Hydel power can also certainly expand since less than a quarter of India’s hydel potential has been utilised. biomass and small hydro. quite apart from using other commercial sources like natural gas. Sikkim and Jammu and Kashmir where there are formidable technical and other problems. coal bed methane and renewable sources like wind. Here is where we confront the question of limits. at the current level of technology and keeping in mind usage projection. Hydel power. for the next two-three decades at least. So India. If we decide to exploit all of our proven coal reserves.

000 Mw of power generating capacity. innovative and non-conventional sources of energy. In any case. And what about natural gas? Well. How it should be added is the real question. Power plants need water. especially given our voluntary pledge to cut the emissions intensity of GDP by 20-25% by the year 2020 on 2005 reference levels. And choices we must make by first making the trade-offs explicit. It also means that India can not afford to turn its back on new. 100.000 Mw would need to be added. Even without tsunami. What I am pointing to is the need to carefully evaluate what the energy implications of the 9%+ growth target will be and then equally carefully analyse each of the energy options from the point of view of its environmental implications. Each of these options involves making tough choices—like how much of natural forest area can we afford to give up now in favour of coal mining in the expectation that over a period of time this loss of forest cover would be made up through compensatory afforestation. coastal locations raise their headaches what with their impact on fishermen and their families and after tsunami the concerns have escalated manifold. It has been estimated that during the 12th Plan period. we also need to manufacture fertilisers at home for which natural gas is an ideal feedstock and thus the amount of gas we can allocate for power generation will necessarily be circumscribed by fertiliser production plans. we would have added around 50. siting of power plants in coastal areas assumes special significance. In the 11th Plan period of 2007/08-2011/12. 11 . there are renewed safety and risk concerns on an aggressive nuclear power portfolio. With the multiple demands on our scarce water resources. Let me complicate life a little more.level of around 3%.

Please note I say emissions intensity and not emission levels per se. But “equitable access to sustainable development” has no such negative connotations. We simply cannot afford absolute cuts in emission levels at this juncture of our development and given the huge unmet demand for electricity in particular. T. The problem with phrases like equitable access to carbon space or even equitable access to atmospheric resources is that they convey the impression that we are asserting some sort of a fundamental right to pollute which given our burgeoning population scares almost everybody in the global community. There has been one very encouraging development in recent weeks. I have requested Dr. From a straight-forward high. 12 . Equity is going to be one of the most basic elements of the architecture of any international agreement as and when all 194 countries can agree and TISS’s continuing work on carbon budgets is very much part of giving concrete. Here I must also acknowledge the research being done by TISS’s climate change team led by my good friend Dr. VI. operational meaning to the idea of equity or of equitable access to atmospheric resources as some have called it or equitable access to sustainable development which was India’s contribution to the negotiating text so as to break the deadlock at Cancun six months back. What we do in the electricity sector is important since it accounts for around two-fifth of our emissions of greenhouse gases and is the single largest source from which we spew carbon dioxide into the atmosphere. inclusive growth theme in the Eleventh Plan. the Planning Commission has now accepted that the Twelfth Plan will be high. Jayaraman. Jayaraman to undertake the difficult task of actually operationalising this concept so that India can take the intellectual leadership on it going forward. But declines in emissions intensity—which means that for a unit of GDP you will emit less and per unit of emissions you will produce more GDP—is an eminently desirable and feasible objective to have.

VII. India’s coal resources are expected to run out of 45 years. Another step that has been taken to make ecology an integral part of the growth process is the initiative the Ministry and Environment and Forests and the Planning Commission are launching on green national accounts. There will be technology innovation and advancements making renewable energy more viable. But even after this. Just two days back. This report takes two GDP growth scenarios upto 2020—8% and 9%---and examines how they can be realised in the backdrop of our Copenhagen pledge that I have just mentioned. the report of an expert group set up by the Planning Commission and the Ministry of Environment and Forests on low-carbon strategies for inclusive growth was submitted. An expert group is being set up under the chairmanship of Sir Partha Dasgupta of Cambridge University widely acknowledged to be the guru on this subject to prepare a roadmap for India to estimate and publish GDP numbers that incorporate environmental costs as well. buildings and forestry. like shale gas and improved grids. This will mean making the right investment and technology choices in different key sectors like energy. Is that the end of our dreams of inclusive and sustained economic growth? We need to be aggressively grasp technology transitions within coal. 13 . That is why it is imperative to make these tradeoffs explicit. low-carbon growth. India would need to be at the forefront of these developments. transport. This is a huge step forward to incorporate ecological considerations into the very core of the growth process. there will need to make choices and there will be trade-offs between ecological objectives and growth goals.inclusive. The report suggests that with what it calls an aggressive effort. fresh sources of primary energy. India can actually reduce its emissions intensity of GDP by around 35% even while maintaining a 8-9% growth trajectory. hydel and nuclear. industry.

14 . we need to focus far more on innovation than we do today. You are all social scientists and bring a valued perspective to the problematique of economic growth and ecology. I suppose since this is a convocation address. In pushing forth a sustainable growth path. I wish all of you the very best.I would like to return to the beginning once again. both of technology and practices. to the Limits to Growth. I find. I must say something for the graduating students as well. In pushing the limits to growth. we need to actively pursue technology and innovations. if not passions. unfortunately. I would expect all of you to be tough and searching critics sensitive to larger social concerns but please do not become vociferous techno-phobes or growth-sceptics. Thanks to that outstanding symbol of technology and growth—the Internet—India is seeing the emergence of a wellnetworked community of neo-Luddites. What I would like to stress to all of you is that your perspective should be free from prejudices. But remember that even the muchreviled Luddites were very selective in their approach in the 18th and 19th centuries when the Industrial Revolution was at its peak. VIII. I don’t want to sound preachy though. a bias against economic growth and technology in the social science fraternity at large. One of the drawbacks of this influential text was that it completely ignored technological fixes and interventions and their impact.

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