COMSIG

COMPOSITE MEASURE OF SUSTAINABLE AND INCLUSIVE GROWTH A PROJECT IN ASSOCIATION OF YOUNG INDIA FELLOWSHIP WITH BASIX ARPITHA UPENDRA SANJOG SAHU SHASHANK SHEKHAR RAI
Under the guidance of: Mr Vijay Mahajan Mr Anoop Kaul

Introduction The Composite Measure of Sustainable and Inclusive Growth is an attempt to provide a quantitative means to understand growth not just through the economic lens but one that is both inclusive and sustainable. This index tries to capture the holistic measure by assessing the impact of economic growth on aspects of human development, environmental protection and institutional stability. The index tussles with some of the inherent contradictions existing in the discourse where growth and equity are often measured in isolation. The theoretical framework for this index abides by certain central principles which guided us during the formulation of the index, these principles are as follows: 1. Growth should be inclusive across different sectors. In the case of India, there are historical divides between different caste groups, as well as divides based on gender e.g. girls have traditionally had lower levels of education than boys, ceteris paribus.1 2. Growth and environmental degradation are seen not as just sharing a cause and effect relationship but one where we study the impact of the growth paradigm on the objective of environmental sustainability. 3. The index ensures that there is harmony amongst the theoretically viewed competing interests of economic growth, inclusivity and environmental protection. This is made possible by selecting indices that highlight various aspects of growth and its ability to induce change. 4. Lastly the other grounding principle of this index is to view growth as a means to realise equity, political stability and human development and challenges the notion of trade-offs.2 Inclusion: In arriving at the definition of inclusion and to map it onto the definition of inclusive growth was theoretically challenging. We chose to use the data and assess the parameters of exclusion to arrive at what inclusion would entail. Exclusion was happening on varied grounds and we chose to concentrate on the exclusion from basic
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http://www2.lse.ac.uk/asiaResearchCentre/_files/Growth.pdf Social accounting matrix for India: concepts, construction and applications :By Basanta K. Pradhan, M. R. Saluja, Shalabh K. Singh
2

human necessities, economic benefits from growth as well as development. Exclusion of course occurs due to various socio-economic factors and we have attempted to take them into account by also highlighting the role of gender, migrants and caste based exclusion from the benefits of inclusion. Inclusion here not only refers to the benefits of growth reaching those excluded but we look at growth in a manner where it facilitates inclusion by the creation of conditions that ensure not just economic but social inclusion. This though idealistic we believe is a holistic way of approaching the issue of inclusion through the understanding that growth can allow for inclusion not just through equitable distribution of its benefits but in the creation of a conducive environment for the reduction of inequity. Thus our definition a broad one at that is as follows identifying the intrinsic link between inclusive growth and poverty: Inclusive growth refers to growth whose benefits and risks are equitably distributed. It is growth whose realisation in both physical and social forms allows for the creation of a conducive environment for inclusion to be a natural outcome, it is growth the assists in the reduction of poverty when seen through its multidimensional lens. This definition fuses all that has been mentioned in the 11th planning commission report as well as the studies which highlight the need for inclusive growth strategy for poverty alleviation.3 Sustainability: Debates surrounding growth, development and the environment are seen as interests that cannot be realised simultaneously. In our index we chose to highlight the impact of our current growth paradigm on sustainability. A simple question that guided the choice of our indices is Can growth be sustainable? If so how? Upon answering this question we will flow into the definition. To address the first question we are of the understanding that growth can be sustainable and the criteria for sustainability are based on minimal impact and precautionary measure. We do not seek to suggest that growth can occur without

http://www.igidr.ac.in/pdf/publication/WP-2008-019

environmental degradation but a form of growth that allows for resources to be used in a prudent manner such that the rights of future generations are secure was a precondition to our claim of sustainable growth. To then arrive at the second question we are unable to suggest a strategy for sustainable growth but are of the firm belief that when growth is being measured it should be done taking into account what has so long been referred to as externalities in economics. The hidden costs of environmental degradation have to be measured to gain a concrete understanding of the nature of growth as well as to challenge the current model of growth which may not be fruitful in the long run. Our definition for sustainable growth is as follows: Sustainable growth is growth whose impact upon the environment viewed as the ecosystem through its multitude of connections is as minimal as possible given the conditions of science and technology and a model where the benefits of growth are distributed based on sustainable practices Political and Institutional Stability: A facilitator for both inclusion and sustainability is the requirement of institutional stability that ensures that these goals are achieved. We view institutions in a flexible manner where they are seen as a set of rules allowing for economic, social or cultural activity. A definition that summarises our view is as follows: Institutions are seen as being a framework of laws or natural rights, within which individuals behave like inmates, or sometimes it seems that institution is the inmates behaviour itself.4 While in means do we suggest that the institution is a prison like system but is one that constantly evolves with dialogue of the agent. Institutional stability is dependent on political stability. Thus both have been given equal emphasis in the index while choosing the myriad of indices. Institutions identify the primary markers of growth and internalise the same in the functioning of their structure be it courts, political parties or social institutions like marriage. We seek to measure the criteria of institutional

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alignment to the agenda of inclusive and sustainable growth in order to promote its realisation. COMSIG The COMSIG is a holistic index comprising of 39 indicators covering the social, economic, environmental and institutional variables. These variables have been divided into the following 8 categories: 1. Health 2. Education 3. Gender 4. Standard of Living 5. Economic Growth 6. Political Stability 7. Institutional Development 8. Environment The index also takes into account some of the well-established indices including the Human Development Index, Gender Inequality Index and Multidimensional Poverty Index of the Human Development Report by the United Nations; the Democracy Index, Political Instability Index, Institutional Sustainability Index, World Governance Index, Corruption Perception Index and Environment Performance Index. COMSIG gives a bird eyes view of the development of the country by integrating various indicators previously held as silos to give a comprehensive picture that should guide the policy makers in locating where and how far are we lagging behind. More importantly, it attempts to take to the next level the Millennium Development Goals and provides a larger and quantifiable description of inclusive and sustainable growth. It also presents how India is performing with respect to the best performing countries with respect to all the indicators and that should give us a better picture of where we are headed with our developmental goals.

Health 51.15 (40.92%)

Life Expectancy 193.54 (58.06%) Malnutrition Prevalence Rate 0.00 (0%) Child Mortality 215.69 (64.70%) Children Enrolled (Primary) 136.32 (68.16%) Children Enrolled (Secondary) 63.35 (31.67%) Literacy Rate 129.64 (64.82%) Mean Years of Schooling 19.78 (9.89%) Pupil-Teacher Ratio (Primary) 82.69 (41.39%)

Education 37.76 (30.208%)

Maternal Mortality Ratio 113.95 (79.76%) Adolescent Fertility Rate 66.89 (46.823%) Adolescent Fertility Rate 66.89 (46.823%) Sex Ratio 117.11 (81.97%) Gender 54.51 (43.60%) Female Population with at least secondary education 42.69(29.88%) Female Share of Parliament Seats 18.96 (13.272%) Female participation in Labour Force 42.73 (29.911%) Contraceptive Prevalence Rate 106.48 (74.536%) Cooking Fuel -Proportion of People Deprived 100.35 (80.28%) Sanitation - PoPD 98.66 (78.92%) Clean Water - PoPD 27.64 (22.11%) Drinking Water - PoPD 31.41 (25.12%) Electricity - PoPD 42.23 (33.78%) Floor - PoPD 62.63 (50.10%) Assets - PoPD 64.91 (51.92%) Internet 6.18 (4.94%) GNI per Capita 11.64 (5.82%) Gross Capital Formation 170 (85.00%) GINI Ratio 55.97 (27.98%) Rate of Unemployment 159.38 (79.69%) Poverty 100.59 (50.295%)

COMSIG 457.54

Standard of Living 54.25 (43.4%)

Economic 62.20 (49.76%)

Political Stability 70.72 Political Instability Index 565.78 (56.57%) (56.576%) Institutional Development 64.20 (51.36%) World Governance Index 141.18 (56.47%) Corruption Perception Index 56.96 (22.78%) Democracy Index 171.67 (68.66%) Institutional Sustainability Index 143.83 (57.532%) Environmental Health 134.53 (80.71 %) Air Pollution 107.77 (64.66%) Climate Change 129.66 (77.79%) Agriculture 2.54 (1.524%) Biodiversity & Habitat 75.24 (45.144%) Water Pollution 51.95 (31.17%)

Environment 62.71 (50.168%)

TECHNICAL NOTES: 1. The figures next to the indicators show the absolute contribution of the indicator to the overall index. For example, Health contributes 51.15 points to the overall figure of 457.54 points of the COMSIG. 2. The figures in the brackets indicate Indias performance relative to the highest performing country. For example, Indias percentage score of 40.92 is an indication of the Indias competence in Health with respect to the best performing countries across the globe in the parameters defined for Health. 3. Environmental indicators are further divided into sub indicators Air Pollution constitutes Sulphur Dioxide, Indoor Air Pollution and Sulphur Dioxide Per Capita; Climate Change constitutes Green House gas emissions per capita including land use emissions, Carbon dioxide in relation to GDP and CO2 emissions per electricity generation; Agriculture covers agricultural water intensity; Biodiversity & Habitat includes Trawling and Dredging Intensity, Forest cover change, Critical habitat protection and Biome protection and Water is constitutes the Water Quality Index and Water Stress Index. 4. All constituents of the index have been given equal weights at every stage. So for example, starting from health till environment, all 8 components have been given equal weight of 0.125. Similarly all components of Health have been assigned the weight of 0.333 and all components of Education have been assigned the weight of 0.20. 5. The scores of each of the variables have been calculated using the normalising formula:

The actual value denotes Indias absolute score on the indicator, the maximum value denotes the absolute score of best performing country and the minimum value denotes the absolute score of the worst performing country. 6. The scores were further put in perspective by analysing their normative value and all variables with a negative impact had their scores deducted from the whole of 1. For example, the score of Child Mortality was 0.3529 which was deducted from the whole of 1 to arrive at the adjusted score of 0.6471 so that a reduction in child mortality would eventually lead to an increase in the overall index score.