Economic growth is just a means to an end. The end is development where people are provided adequate access to resources, which can enable them to reach their true potential. Yet, many policy analysts get so enamoured with growth that they overlook many other important economic indicators. The ‘growth at all costs’ syndrome reduces the argument to a single dimension without providing a holistic perspective. To assuage this syndrome, it is important to differentiate between Good Growth and Bad Growth since not all economic growth is beneficial. Growth may have severe deleterious effect if

1. It comes at the cost of equality: If a select few have unfair access to opportunities at the cost of many, it will lead to economic inequality. It will also exacerbate other forms of inequality like gender, regional, religious and caste inequality. Inequality would eventually lead to a hollowing out of the middle class and create disharmony in the society.
2. It is backed by excessive debt: In such a situation, it’s growth borrowed at cost of future generations. The ill-effects of debt will manifest themselves later through excessive taxation and lower growth. It would also end up reducing the confidence of potential and current investors.
3. It comes at a cost of health, environment or well-being: Child labour or consumption of addictive substances like tobacco and narcotics may improve growth in a warped way, but has negative societal effects.

Good Growth, on the other hand, is equitable and ethical growth, arising due to improvement in labour productivity, innovation, knowledge and technology.

On the capital front, Good Growth typically maximises equity capital while keeping the debt component at conservative levels. Careful calibration of investment, savings and consumption levels is required to attain good growth as well as keeping inflation in check. Inflation hurts the poorer sections of society the most by debasing the currency and eroding the purchasing power of existing money supply. Good growth basically entails living within one’s means while effectively managing the scarce resources to its full potential. Structural reforms, infrastructure and human development can pave the path to achieving the maximum potential of good growth in a sustained manner.

Giving credit where it is due, the present government has put in a lot of productive effort in infrastructure especially railways, power, roads, logistics and ports. What seems to be missing is a qualified intent and implementation on the structural and institutional reforms front. Essentially, structural reforms would require a mindset to accept significant systemic changes and to encourage an approach which challenges the status quo to make the required changes. Perhaps, the Government should take a leaf out of the books of Reserve Bank of India Governor Rajan who is implementing important structural reforms in banking sector. Rajan’s major contribution with regard to mending the broken debt recovery processes in the banking system, especially for large corporates, should be acknowledged and appreciated. He will not be around to finish the tasks he has started, but hopefully his successor will carry on the good work that has been initiated.

Overall, it is important to recognize that India can progress towards its economic ambitions successfully if it considers itself an emergent system rather than an established system where challenging the status quo is not encouraged. In an emergent system, innovative, insightful and imaginative ideas are not throttled but are carefully examined for their inherent utility. Implementation of structural reforms requires challenging old norms and replacing them with fresh ideas that work better.

The Government should also allocate more resources towards enhancing human development, which improves the long-term potential of good growth. In this regard, the government has undertaken incremental efforts, but a lot more needs to be done. Swachh Bharat Abhiyan (SBA) is a good initiative that is transforming sanitation, but it needs to be backed up by other such measures to improve access to essential services like clean drinking water, nutrition and basic healthcare. In the same vein, the government can contemplate renewing focus on the Sarva Shiksha Abhiyan (SSA) or the “universal education” programme  that could not only drastically improve literacy levels but also the quality of education. Within a realistic timeframe, every citizen of the country should be able to read, write and have basic arithmetic skills. Higher literacy levels would enable the poor to assimilate into the mainstream and contribute more towards the society while enriching them to get rid of the intergenerational poverty that besets them.

Progress in human development can be tracked by closely following the Human Development Index (HDI). The government has put in earnest efforts in improving the business climate by focusing on Ease of Doing Business Rankings undertaken by World Bank. Likewise, similar efforts should be undertaken by tracking HDI rankings, which are put together by the United Nations. Both metrics complement each other as a healthy and knowledgeable workforce is much needed to successfully implement entrepreneurial initiatives and thereby improve the business climate. Coincidentally, India is ranked 130^th in the world on both HDI and Ease of Doing Business Index. To gather the additional resources required for Human Development efforts, the government can privatise its stake in PSUs, where there is no utilitarian benefit or where the government does not have an inherent or natural advantage.

A case in point would be Air India. With the fall in oil prices over the past few years, there would be many takers for buying out the beleaguered airline from the government. Additionally, the government can monetise its unused land holdings through an auction process to generate further resources. This way, the government’s maxim “Minimum Government, Maximum Governance” can become the engine for achieving inclusive development, the cornerstone of PM Modi’s slogan “Sabka Saath, Sabka Vikas”.