New Delhi: India’s economic survey for 2010-11 has for the first time explicitly pinpointed the linkages between moral values such as honesty and trustworthiness to economic growth in Asia’s third largest economy— something the government’s chief economic adviser Kaushik Basu referred to as “contemporary thoughts” relating to policy challenges.
The yearly state of the economy report compiled by the finance ministry and released on Friday noted that “economic analysts often treat growth and development as rooted in economic policy alone. In reality, much depends on the social, political and institutional milieu” in the preface to a chapter titled Micro-foundations of Macroeconomic Development.
The section, which also underlines the importance of financial inclusion, opening up the Indian market to multi-brand retail and passing on subsidies directly to the needy, states that “if a particular citizenry is known to be trustworthy, people will be more likely to cut deals with the people of that nation and over time the nation will do better and prosper economically...
“Once we recognize that honesty, integrity and trustworthiness are not just good moral qualities in themselves but qualities which when imbibed by society, lead to economic progress and human development, people will have a tendency to acquire these qualities,” it added.
The comments come as Prime Minister Manmohan Singh’s United Progressive Alliance (UPA) government is battling a slew of corruption charges sullying its image. They include alleged irregularities in the allocation of the second-generation (2G) spectrum that directly involved former telecom minister A. Raja, financial mismanagement in the organization of the October 2010 Commonwealth Games and the Adarsh Housing Society scam where apartments meant for widows of the 1999 Kargil war were instead allotted to senior bureaucrats, top military officials and politicians.
Concerned by the number of scams coming to light, a group of prominent industrialists and policy makers wrote an open letter to Indian politicians on the eve of the World Economic Forum in Davos last month, urging the government to address the “governance deficit” and corruption. On Thursday, after months of squabbling, the UPA government finally agreed to a joint parliamentary probe to investigate 2G spectrum allocation, alleged to have cost the exchequer Rs 1.76 trillion.
“I feel especially today in India when these qualities are coming up for a huge amount of public discussion it is very important to stress... that these qualities are good for economic development, so we thought we have to give some focus to that and we have this in the economic survey,” Basu said.
He said that the issue had been “of interest to us and it’s not as if the current events have made us turn to it but the view that there are systemic flaws and the systemic flaws should turn your attention to the problem”.
Charan Wadhwa, economist and senior fellow with the Centre for Policy Research think tank in New Delhi, was of the view that the comments in the survey represent a “long- overdue recognition” of the problems surrounding economic development.
“It goes to show that there are other issues beyond economic policy-making that one has to look at—social issues, however intangible they may be. This is the first time that this issue has been referred to in such explicit terms, in such sharp focus, though there have been references to them before,” he said.
Bhaskara Rao, chairman of the New Delhi based Centre for Media Studies, said the survey comment “substantiates the apprehensions of the common people”.
Prime Minister Singh’s Congress Party was unavailable for comment but the main opposition Bharatiya Janata Party described the economic survey comments as a “slap in the face of the government”.
“Definitely, the way corruption is being unearthed every day, it affects the credibility of the nation and the government is responsible for this,” said BJP spokesman Prakash Javadekar. “We will demand a full discussion on the survey in Parliament.”
According to Transparency International’s Corruption Perceptions Index (CPI) for 2010, India is ranked at 87 among 178 countries, down three spots from 84 in 2009.