Keywords: sustainable economic welfare, GPI, genuine progress indicator, India, economic growth, economic development, gross domestic product, GDP, distribution equity, production excellence, resource use efficiency, natural capital depletion, sustainable development, sustainability
How much progress has been recently made in India? Finding out with the use of a Genuine Progress Indicator
Gross Domestic Product (GDP) is an economic indicator that fails to fully account for the major benefits and costs of economic activity. As a consequence, it is an inadequate indicator of sustainable economic welfare. To overcome the deficiencies of GDP, a Genuine Progress Indicator (GPI) was devised in the 1990s. The GPI has since undergone significant modification and improvement. Calculation of the GPI for India for the period 1987-2003 reveals two important pieces of information. Firstly, the per capita GPI remained consistently lower than per capita GDP over the entire study period. Secondly, the rate of India's genuine progress between 1987 and 2003 was less spectacular than that indicated by India's per capita GDP. To facilitate a greater rate of genuine progress over the coming decades, India needs a new phase of GDP growth based on distributional equity, production excellence, increased resource use efficiency, and minimal natural capital depletion. Eventually, however, India will need to make the transition to a steady-state economy — something which ought not to preclude further progress — or face the prospect of having to endure a declining per capita GPI caused largely by an economy growing beyond its maximum sustainable scale.