The Hindu Business Line : Walking on two legs

AT the National Development Council meeting held earlier this week, the Prime Minister, Dr Manmohan Singh, reiterated his well-known position on economic growth and social justice, his contention being that the two should be combined. As he put it, "We have no option but to walk on two legs".

Indeed, the present juncture lends itself to such an operation what with the Left taking the stand that the "people" must not suffer in the UPA's bid to clean up the Augean stables of subsidies, etc.

This is not to suggest that there was no political intent behind the Prime Minister's NDC statement. On strictly political grounds, it would be unbecoming of the Prime Minister, and a trifle foolish also, not to put forward his Ministry's point of view vis-à-vis the developing battle between the Left and the Congress on, among other things, the BHEL disinvestment issue and the fuel price increase. But Dr Singh, being perhaps more of a serious economist than a politician, would probably not have made the statement if he did not believe in it from a purely academic point of view.

Talking about social justice and economic development, Dr Singh said: "We need to ensure that while sustaining the growth impulses, deliberate efforts are also made to reduce disparities in income and wealth to ensure that all sections of society participate in growth". He cited the people's "right to a decent livelihood, to education and well-being, to equality of opportunity, and to peace and prosperity" as the underpinnings of the thesis that economic development without social justice would constitute no development at all in the real sense of the term.

Apart from everything else, what this implies is that there is no huge gap between the basic development approach adopted by the Left and Dr Singh, who heads the UPA Government. In other words, the Prime Minister is fully aware of the place and role of the "people" in the quest for, and partaking of the fruits of, economic development. If this is so, what explains the perceived "divide" between the two sides on the issue of social justice and economic development? Perhaps it is because the nature of the interaction between social justice and economic development is determined to a large extent by the stage of development an economy is in. In other words, the more developed, or richer, an economy, the greater the resources it can set aside to look after the welfare of the common man. Conversely, the poorer an economy, the more problematic becomes the task of looking after the average citizen's basic welfare needs while trying to attain development goals.

To take the fuel price increase, the valid point has been made that if the Government had forsaken the revenue, which Customs and excise duties yield from crude/petroleum product imports and sales within the country, the need to increase prices would have been minimised and the people would have been affected much less than they are now by the increase in the international price of crude.

On the other hand, however, the Government would have had to forgo revenue from this sector, which it can ill-afford in the present circumstances no matter how big or small the loss.

The BHEL issue does not involve social justice per se, but it does impinge on the larger subject of the protection of navratna PSUs and the resources requirement of the economy, the latter being of paramount importance from the point of view of the people's welfare in a poor but growing economy.

The basic point, then, is not the acceptability of the link between social justice and the quest for economic development, but the fact that a poor country finds it more difficult to protect the needs of social justice in its quest for growth — especially at times when the environment is just right to encourage the growth impulses for maximum results — than would a rich economy which has an abundance of investible resources at its command.

As the Prime Minister said at the NDC meeting, India is now "at a historic point in its development strategy", the conditions for growth never having been as favourable as they are now. In short, a trade-off cannot be avoided, but what are the limits that have to be set on political grounds? That is the core issue facing the country today.

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