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Measuring Sustainability with Macroeconomic Data for India

Author

Listed:
  • Purnamita Dasgupta

    (Indian Council for Research on International Economic Rela)

  • Shikha Gupta

    () (Indian Council for Research on International Economic Rela)

Abstract

This paper investigates certain macro data on the Indian economy to draw inferenceson the sustainability of the economic growth experienced over the last couple ofdecades. Interpreting sustainability in terms of the maintenance of different forms ofcapital to ensure that future consumption levels are at least as high as current levels,estimates of investment have been made using theoretically consistent models anddata relevant to the Indian context. Subsequently, the paper investigates the extent towhich the investment that has taken place over a thirty year period (from 1976-77 to2004-05) has been aligned with the consumption path. Investment estimates are foundto be a reliable indicator of sustainability of the future consumption path and averagefuture consumption is likely to be higher than current consumption. The findingsreveal that while capital formation in manufactured assets has been fuelling wealthaccumulation in the economy, there has been a rise in the degradation of natural capital stocks. However, considering the aggregate picture, taking note of investmentin human capital, produced capital and the depreciation of natural capital, there hasbeen net wealth accumulation in the economy. Per capita wealth has been rising overthe period, with a sharp rise observed from the mid 1990s onwards.

Suggested Citation

  • Purnamita Dasgupta & Shikha Gupta, 2008. "Measuring Sustainability with Macroeconomic Data for India," Indian Council for Research on International Economic Relations, New Delhi Working Papers 214, Indian Council for Research on International Economic Relations, New Delhi, India.
  • Handle: RePEc:ind:icrier:214
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    File URL: http://www.icrier.org/publication/WORKING_PAPER_214.pdf
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    Keywords

    Sustainable Development; Investment; Future Consumption; Per Capita Wealth; Human and Natural capital;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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