Is India on a Sustainable Development Path?
AbstractSustainability requires that the productive base measured in terms of comprehensive wealth of a society should be increasing on per capita basis. Comprehensive wealth includes manufactured, human and natural capital along with knowledge base and institutions. This study offers methodological improvements and provides estimates of the growth rate of per capita comprehensive wealth over the period 1970-2006 for Indian economy. It considers air, water and soil degradation along with energy, minerals and forests depletion. To measure the value and composition of investment in natural capital, it estimates resource depreciation allowances on the basis of Hotelling rent; it adjusts education expenditure for depreciation in human capital; and uses the estimates of TFP that takes into account natural capital in the production of commodities and services. The empirical application suggests that Indian economy is barely sustainable. Growth rate of per capita comprehensive wealth was virtually near zero, it was only 0.15 percent per year for the study period. The growth rate was negative till 1983. Thereafter it became positive; however it was less than one percent in 1980s and 1990s. In recent years the growth rate was about 4 percent. Despite certain limitations, the study underscores the need for vigorous public policies that help in preventing excessive resource depletion and promoting higher genuine investment.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10086.
Date of creation: 05 Aug 2008
Date of revision:
Sustainability; development; Comprehensive wealth; Hotelling rent; India;
Find related papers by JEL classification:
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-DEV-2008-08-31 (Development)
- NEP-ENV-2008-08-31 (Environmental Economics)
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