Thursday, May 11, 2000

India's One-Billionth Asset-The path to prosperity is economic freedom, not population policy

At noon on 11 May 2000, Aastha, a baby girl born in Delhi. She was officially declared as the billionth Indian.

My article titled "India's One-Billionth Asset-The path to prosperity is economic freedom, not population policy" was published in May, 2000.

India's population officially surpasses the one billion mark today. While government officials search for the suitable baby to herald the occasion, there are no plans for any grand birthday party. Instead people are being somberly reminded of the burden of the billion plus population.
It is ironic that India has reached a situation where the birth of a child is considered to have a negative impact on GDP and other economic measures, but the birth of a calf, or production of an additional ton of rice or iron is considered to be positive.

Is India's growing population to blame for its relatively poor economic performance in the past 50 years? Or did the policies pursued by successive governments lead to a massive waste of resources -- including human resources -- and seal the fate of so many in abject poverty?
Clearly, it is the economic policies that have failed, and population has come along as a convenient bogey to hide the policy failures. Indeed, population policy has become a weapon of war against the people themselves, placing the blame on the victims -- the poor -- for India's massive poverty.

The government argues that India's natural resources are simply inadequate to meet the needs of growing numbers of people. But as economists such as the late Julian Simon have pointed out, prices of virtually all major commodities have been falling. This indicates not so much a scarcity of supply in India, but an inability to utilize these resources efficiently due to misguided policies.

Foremost among these have been restrictions on trade. When the British left in 1947, India's share of global trade was about 1.5%. Today it is just 0.7%. Trade was considered incidental to development. Leaders chose to ignore the fact that, just as democracy empowers the people by allowing them to make choices in the political domain, trade empowers them by expanding the range of choices in the economic domain.

Having forsaken the road to empowerment, the state adopted a system of licenses, permits and quotas allegedly to promote planned all-round development and ensure the equitable distribution of resources. The result has been over-centralization, corruption, waste and poverty.

Now some small steps have been taken to liberalize the economy and free the people froom the shackles of state regulations. However, it is not easy for vested interests to give up their privileges. So we still see attempts to resurrect the issue of population growth in order to justify statist policies.

It is claimed that increasing population places unsustainable demands on the environmental resources, and therefore restraint on population is necessary to preserve the health of the nation and the planet. Of course, there has been some significant environmental degradation alongside economic growth. But more often than not, this is due to the failure to bring environmental resources under the discipline of market forces. After all, environmental quality is like any other value-added product. -- economic development alone makes it affordable.

Liberalization and globalization provide the best opportunity to the poorest of the people to escape the clutches of both domestic tyrants and failed policies. So recent protests, particularly in the West, against liberalization and globalization in the name of the poor can at best be misinformed -- at worst racist.

Recurring themes at these protests have been the claim that the present levels of consumption is inequitable, since barely 20% of the population consumes about 80% of the resources, and that these levels of consumption are unsustainable, since the global environment may collapse if all the Indians and Chinese aspire to the consumption patterns of the developed countries.

Maintaining the status quo and requiring those who in any case have very little to consume, can only help perpetuate the gap between the haves and the have-nots. Some intellectuals, with no political constituency, and activists sustained by constituents who don't have any concept of poverty in third world countries, can hope to get away with such iniquitous policies. But no political leader in these countries, least of all a democratic one, can escape the wrath of the people he promotes such an approach.

Nevertheless, the arguments persist and are quite widely held in influential circles in many countries. In India, of course, Indira Gandhi's misadventure into population control in the mid-1970s has made the political authorities extremely cagey about direct measures, no matter how much they might want them.

But in the last ten years, there has been as attempt to devise more ingenious ways of attacking the population problem by attacking the poor directly. In many local bodies, electoral criteria disqualify anyone with more than two children to contest a post. Such laws were also proposed at the national and state levels, but because they would have hurt incumbents the most, they never saw the light of day.

The population policy announced by the present government a few months ago promises a wide range of incentives to those who adopt the two-child norm, while doing away with the direct disincentives and penalties of the past.

While this may be seen as a sign of progress, any form of population control diverts attention from real issues of economic policies that might have made the need for a population policy redundant. In addition, the focus on fertility necessarily politicizes the whole issue.
India has had a policy on virtually everything under the sun. Yet, her performance has left much to be desired. India's population policy stand as the ultimate symbol of the political elites' arrogance. More than anything else, this policy implies that a voter has political rights, but not the right to decide something so intimate as the size of his or her own family.

As we enter a new century, it is time for Indians to jettison this sense of contempt for our own people. People are not only consumers, they are also producers. Indeed, they are the ultimate resource in that they give meaning to all other resources. A population policy fails to distinguish between people and all these other resources, and therefore ends up launching a war on the very people who constitute the demographics.

Instead of framing more new policies, it is time to take a break from policy making, and give people the choice to make their own decisions -- economic, political and social. What people need is the space to harness their own enterprise and initiatives and realize their own potential. In this regard, freedom is the best policy. May be then we will be able to celebrate the arrival of the billionth Indian.

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