THE LIMITS TO GROWTH REVISITED

Jairam Ramesh
Minister of State ( Independent Charge)
Environment and Forests, Government of India

Text of the Convocation Address

Delivered at the
Tata Institute of Social Sciences, Mumbai
May 11th, 2011

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I
I am delighted to be back in this beautiful campus. It is a particular privilege
to be invited to the convocation being held in the Platinum Jubilee year of
your Institute. A number of distinguished men and women, including Prime
Ministers, have been at such functions in the past and I am not sure what I
have done to be included in this galaxy. When Dr. Parasuraman first
approached me, I had just one question—one that has become somewhat of
a habit now -- will I be asked to wear the awful attire normally associated
with convocations? On being re-assured that TISS follows a saner and more
civilised dress code, I readily agreed to be with you today.
I cannot but help recall that I first came here in December 1974 to attend a
seminar on urban planning. I remember the redoubtable Dr. M.S. Gore
being present. My own paper, that I must confess appears so naive, so
theoretical and so unrealistic in retrospect, was based on my bachelor’s
thesis at nearby IIT on urban modelling based on the then-fashionable
systems dynamics approach developed by Jay Forrester, Dennis Meadows
and their colleagues at MIT. This was a time when I believed that
management science broadly defined to include game theory, operations
research, systems analysis and the like held the keys to all problems of
public policy.
My intellectual pursuits subsequently went in other directions but today
almost 37 years later I wish to return to another theme made extraordinarily
popular by Meadows and his team which is relevant to my current
ministerial pre-occupations. The Limits to Growth was, some of you might
recall, the title of a highly influential book written by Dennis Meadows and
his colleagues that hit the headlines in 1972. My friend Tariq Banuri the
Pakistani economist told me last year that that the release of this study was
one of four seminal events to have decisively shaped the modern global
discourse on environmental issues--the other three being the publication of
Rachel Carson’s Silent Spring in 1962, Paul Ehrlich’s The Population Bomb
in 1968 and Indira Gandhi’s famous speech to the first UN Conference on
the Human Environment at Stockholm in June 1972.

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II
The question I want to ask today in the Indian context is whether we should
even worry about the limits to growth, or more precisely, about the limits to
sustained high growth.
It is a good time to ask this question. But let me straightaway admit that
while posing the question is easy, finding answers that will be politically
acceptable and also carry conviction with the expanding consumerist classes
in our country will be very difficult. To give a very obvious example, we are
all agreed that public transportation must get over-riding priority but are
we, individually and collectively, prepared to accept the fact that the rate of
growth of car ownership in our country that is following in the footsteps of
that in the USA and China is a recipe for disaster? Are we prepared to
change our consumption behaviour ? I suspect we are not.
Anyway, why do I say it is a good time to at least pose this question of limits
to growth? Between 2003/04 and 2010/11, the Indian economy has
averaged an annual rate of real GDP growth of 8.5%, an unprecedented
achievement. The Planning Commission is setting a target of 9%+ growth
rate for the 12th Five Year Plan that commences in April 2012. I know many
social scientists knock the idea of GDP growth as a measure of progress and
even some Nobel Prize-winning economists like Amartya Sen himself and
Joe Stiglitz have written eloquently on the need to shed our obsession with
high GDP growth as presently defined.
But while we must acknowledge its limitations as a measure of progress and
welfare, the fact remains that GDP growth is the most convenient and most
widely used single index of the dynamism of a country’s agricultural,
industrial and services sectors.
I entirely agree that we should not be overly obsessed with high GDP growth
but neither should we ignore its criticality particularly as an instrument to
create more jobs and to generate more revenues for the government to
invest in both infrastructure and social welfare programmes. Let us not
forget that the Mahatma Gandhi National Rural Employment Guarantee Act
which is today the world’s largest social safety net programme would simply
not have been possible without the proceeds that the growth process
generates. Let us also not run away from the stark reality that over the next
decade India’s labour force will increase by anywhere between 80 million
and 110 million—an astoundingly staggering number—China’s labour force,
by contrast, will increase by just about 15 million over the same period. And
it is growth alone that will create the jobs and give us the resources to invest
in skill-development so essential to reap the “demographic dividend”.

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Let me also recall here a simple calculation often ignored by critics of GDP
growth as the index of economic performance, particularly by non-
economists. And this is that we are talking of compound growth rates. An
economy growing at 5% per year will double in 14 years and quadruple in 28
years. An economy growing at 9% per year will double in roughly 8 years
and quadruple in 16 years. When international comparisons have acquired
importance and when high GDP growth has strategic consequences as well
for India especially vis-a-vis our neighbours, the power of compounding
should not be devalued.
There is yet another reason why we need to sustain high GDP growth rates.
And that is because of the need to avoid penalties imposed by financial
markets on economies. With high GDP growth rates, our fiscal deficit,
current account deficit and public debt numbers look manageable and we
avoid either substantial downgrading of credit ratings or substantial capital
outflows. Crucial macroeconomic indicators that are tracked by markets
worldwide look good in India when judged against the backdrop of high
GDP growth rates—otherwise, we could be in serious trouble.
III
Where will the limits to growth emanate from?
For decades, the Planning Commission has worried about the fiscal limits to
growth. In the debate on what we can or cannot achieve, the Planning
Commission has always focussed on macro-variables— for instance, savings
and investment rates, tax:GDP ratio, debt:GDP ratio, fiscal and current
account deficits to name some of the more prominent of them. Of late, there
has been a great deal of discussion on inflation and its impact on growth.
There are those who believe that high inflation is an inevitable price we have
to pay in the short-term for high growth while there is now a consensus view
emerging that high inflation now is a barrier to high growth in the medium-
term and thus needs to be tackled boldly. The recent decision of the Reserve
Bank of India (RBI) to hike interest rates is a powerful reflection of this new
view which, in my opinion, should have been articulated forcefully much
earlier.
I would suggest that the time has now come for India to look at the limits to
growth not just from a macroeconomic point of view but also from an
ecological point of view. Incidentally, this was one theme running through
the original Club of Rome study but over the years we seem to have lost
sight of it.

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We do not have to subscribe to the apocalyptic vision of the Club of Rome
because over the past three decades technology has undermined many of the
its predictions—the most famous of which being we will run out of oil by the
turn of the 20th century. Incidentally, technology has also made nonsense of
the dire predictions made in the 1960s about India becoming a food basket
case. But we do ourselves no favour if we don’t even try to pose the limits to
growth question from an ecological perspective and then try to assess what
the 9%+ growth means for our water resources, our forest wealth and
indeed for our entire and very variegated and rich biodiversity.
But why now particularly? Can’t we wait for a decade, grow and then deal
with its ecological consequences? Can’t we follow the American or even
Chinese approach of “harness growth gains now, bear growth pains later”?
IV
There are many reasons why India has to be different.
First, ecology in our country is not just a matter of lifestyles as it is in the
developed countries but of basic livelihoods—whether it be the protests in
Lanjigarh, in Banaskantha, in Srikakulam or just a couple of days back in
Aligarh, whether it be campaigns like the one launched almost four decades
ago by women in the hills of Uttarakhand that was immortalised in history
as the Chipko movement or whether it be agitations like the one launched by
the Narmada Bachao Andolan that was spearheaded by a feisty TISS alumni
who continues to make life uncomfortable for me I might add.
Second, already, the public health effects of development paths followed
over the past have become visible—whether it be the growth of cancer in
Bhatinda, the impact of Endosulphan in Kasargode or the incidence of
respiratory diseases in Chandrapur. We have been guilty of neglecting these
effects. Health expenditures both in urban and rural India are on the rise
and are adding to the indebtedness of poor households especially. It is
entirely possible that the increased health expenditures are being caused, in
part at least, by the ill-effects of air and water pollution.
Third, the impacts of ecological damage on environment are better
understood today than at any time in history. A whole science of ecosystem
valuation and “green” national accounting (a theme to which I will return
later) have emerged, which help give us a much better idea today of how
much ecological damage is being caused by the conventional growth process
than ever before in the past. Just as an example, according to the World
Bank data, India’s Gross National Savings as a percent of GDP was around
34.3% in 2008, but its “Adjusted Net Saving” in the same year was 24.2%,
the difference arising due to the depletion of natural resources and pollution
related damages, in addition to conventionally measured depreciation of the
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nation’s capital assets. Several other such assessments show similar results.
In the face of such rising and credible evidence, we cannot ignore the
ecological cost of the growth process.
Fourth, climate change is a reality and India will be profoundly impacted by
it in multiple dimensions like no other country whether it be through (i)
effects on the behaviour of the monsoon which retains its centrality as a
determinant of agricultural performance; (ii) on the health of the Himalayan
glaciers which affects the water security for almost half a billion people
living in the Ganga basin; (iii) on the rise of mean sea levels that directly
impacts on the livelihoods of at least 7 million fishermen and their families
apart from the million who live in coastal areas in thirteen states along a
7500 km coastline; and on our forest cover which is home to India’s
considerable mineral wealth, especially iron ore, bauxite and, of course,
coal. Global warming threatens humanity as a whole but India stands out in
terms of its vulnerabilities in diverse ways.
Finally, there is the stark reality that India will add another 400-500 million
people by the middle of this century. Many advanced countries confront
population declines, while it has been said that China faces the prospect of
becoming old before becoming rich like the West. But the demographic
momentum in its magnitude certainly is unique to India. And sustainable
development, after all, is development that “ meets the needs of the present
generation without compromising the ability of future generations to meet
their own needs”.
V
If we accept that we need to be different because of these five reasons I have
just outlined, then let us move ahead and go back to the original question—
what the ecological limits to sustained high growth? It is a question that we
can both afford to and must ask. We can afford to ask this question,
incidentally, because we are a late-comer to the sustained high GDP growth
rate club and being a late-comer means you don’t have to necessarily repeat
the horrendous mistakes others have made. It is essential that we ask this
question, since we are in a frenzy to make up for lost time and since a large
section of our population will be impacted by ecological compromises that a
sustained high growth would demand.
In my view most fundamentally we must understand what sustained high
growth means for the energy sector. Economic growth requires energy to
fuel it. This in turn requires that resources be extracted from nature or the
environment to manufacture goods, provide services and create capital. It
is, therefore, crucial to understand the implications of high growth and its
limits in terms of energy. Of course, this is not the only impact. High GDP

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growth coming from high manufacturing growth will lead to air and water
pollution. Expanding urbanisation will add to the damage to our already
polluted rivers—which are more sewers actually. High growth will generate
huge solid waste that will have to be managed in a better fashion than we
have done so far. But today I will focus on the energy sector alone.
Growth requires energy or, more pointedly, it requires electricity. We don’t
have to believe in Lenin’s famous equation—Soviet power plus electricity
equals Communism” to grasp the absolute criticality of electricity for our
homes, for our farms, for our factories and offices, for our schools and
hospitals.
A 9%+ rate of growth, calculations based on past trend reveals, will require a
7% rate of growth in electricity consumption. And past trends are not always
reliable since it is well known that there is both considerable suppressed
demand and a huge backlog of basic demand itself that has to be met. Here
is a depressing statistic that illustrates the magnitude of the challenge ahead
—more than half, around 56%, of rural households are without electricity.
This translates into a population of close to 400 million.
Where will this electricity come from?
Many environmentalists argue for giving primacy to energy efficiency and
renewable. Now, nobody can really argue against energy efficiency and
renewables.
Aggregate technical and commercial losses in power distribution, for
instance, for the country as a whole are over 30% whereas it should be no
more than 10-15% at most. Mandatory fuel efficiency standards in the
automotive sector is an idea whose time has come and I am glad to say that
they are being finally notified in the next few days although they will be
mandatory only from 2015 onward . The use of new supercritical and ultra-
supercritical technology in coal-based power generation will lead to higher
efficiency in coal utilisation necessitating lower use of coal.
Recently, the World Bank has published a detailed report that India can
harness, in a cost-competitive manner, upto 60,000 MW of power capacity
through renewable like solar, wind and biomass whereas our installed
capacity in these areas is less than 8000 Mw.
But the question is whether a nation of 1.2 billion and a country that will be
1.6-1.7 billion by the middle of the century can fulfil the economic
aspirations of its people only or even very substantially through efficiency
improvements and renewables, important as they definitely are. My own
sense, after over a quarter of century of involvement and experience in the
energy sector is that the answer to this question is “no”. Definitely in the

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short-run, renewable will have a limited role in the energy basket, largely on
account of the absence of a commercially viable model for renewable energy.
So India, will, for the next two-three decades at least, have to depend on
largely on coal, hydel and nuclear power, quite apart from using other
commercial sources like natural gas, coal bed methane and renewable
sources like wind, solar, biomass and small hydro.
Here is where we confront the question of limits.
Coal-based power can certainly expand since we have the world’s third
largest reserves of coal, albeit of relatively poor quality as judged by its high
ash content. But substantial coal reserves that will need to be worked upon
in the future to increase coal production are located in the rich forest areas
of Jharkhand, Chattisgarh and Orissa. How much coal do we produce and
how much of these natural forests we protect is a choice that confronts us
today. If we decide to exploit all of our proven coal reserves, at the current
level of technology and keeping in mind usage projection, India will run out
of coal in 45 years.
Hydel power can also certainly expand since less than a quarter of India’s
hydel potential has been utilised. But new hydel sites are the subject of
inter-state river disputes or are located in a few states like Arunachal
Pradesh, Sikkim and Jammu and Kashmir where there are formidable
technical and other problems. Hydel power, clean as it may seem, presents
its own share of ecological headaches whether it is the submerging of large
tracts of forest lands for big reservoir-based dams, or the negative impact on
river biodiversity in run-of-river projects.
Nuclear power is a third option but under the most optimistic scenario
cannot contribute more than 5-6% of electricity supply by 2020, up from the
present level of around 3%. In any case, there are renewed safety and risk
concerns on an aggressive nuclear power portfolio.
And what about natural gas? Well, we also need to manufacture fertilisers at
home for which natural gas is an ideal feedstock and thus the amount of gas
we can allocate for power generation will necessarily be circumscribed by
fertiliser production plans.
Let me complicate life a little more. Power plants need water. With the
multiple demands on our scarce water resources, siting of power plants in
coastal areas assumes special significance. Even without tsunami, coastal
locations raise their headaches what with their impact on fishermen and
their families and after tsunami the concerns have escalated manifold.

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What I am pointing to is the need to carefully evaluate what the energy
implications of the 9%+ growth target will be and then equally carefully
analyse each of the energy options from the point of view of its
environmental implications. Each of these options involves making tough
choices—like how much of natural forest area can we afford to give up now
in favour of coal mining in the expectation that over a period of time this
loss of forest cover would be made up through compensatory afforestation.
And choices we must make by first making the trade-offs explicit. It also
means that India can not afford to turn its back on new, innovative and
nonconventional sources of energy.
In the 11th Plan period of 2007/08-2011/12, we would have added around
50,000 Mw of power generating capacity. It has been estimated that during
the 12th Plan period, 100,000 Mw would need to be added. How it should be
added is the real question, especially given our voluntary pledge to cut the
emissions intensity of GDP by 20-25% by the year 2020 on 2005 reference
levels.
Please note I say emissions intensity and not emission levels per se. We
simply cannot afford absolute cuts in emission levels at this juncture of our
development and given the huge unmet demand for electricity in particular.
But declines in emissions intensity—which means that for a unit of GDP you
will emit less and per unit of emissions you will produce more GDP—is an
eminently desirable and feasible objective to have. What we do in the
electricity sector is important since it accounts for around two-fifth of our
emissions of greenhouse gases and is the single largest source from which
we spew carbon dioxide into the atmosphere.
Here I must also acknowledge the research being done by TISS’s climate
change team led by my good friend Dr. T. Jayaraman. Equity is going to be
one of the most basic elements of the architecture of any international
agreement as and when all 194 countries can agree and TISS’s continuing
work on carbon budgets is very much part of giving concrete, operational
meaning to the idea of equity or of equitable access to atmospheric
resources as some have called it or equitable access to sustainable
development which was India’s contribution to the negotiating text so as to
break the deadlock at Cancun six months back. The problem with phrases
like equitable access to carbon space or even equitable access to atmospheric
resources is that they convey the impression that we are asserting some sort
of a fundamental right to pollute which given our burgeoning population
scares almost everybody in the global community. But “equitable access to
sustainable development” has no such negative connotations. I have
requested Dr. Jayaraman to undertake the difficult task of actually
operationalising this concept so that India can take the intellectual
leadership on it going forward.
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VI
There has been one very encouraging development in recent weeks. From a
straight-forward high, inclusive growth theme in the Eleventh Plan, the
Planning Commission has now accepted that the Twelfth Plan will be high,
inclusive, low-carbon growth. This is a huge step forward to incorporate
ecological considerations into the very core of the growth process. Just two
days back, the report of an expert group set up by the Planning Commission
and the Ministry of Environment and Forests on low-carbon strategies for
inclusive growth was submitted.
This report takes two GDP growth scenarios upto 2020—8% and 9%---and
examines how they can be realised in the backdrop of our Copenhagen
pledge that I have just mentioned. The report suggests that with what it calls
an aggressive effort, India can actually reduce its emissions intensity of GDP
by around 35% even while maintaining a 8-9% growth trajectory. This will
mean making the right investment and technology choices in different key
sectors like energy, industry, transport, buildings and forestry. But even
after this, there will need to make choices and there will be trade-offs
between ecological objectives and growth goals. That is why it is imperative
to make these trade-offs explicit.
Another step that has been taken to make ecology an integral part of the
growth process is the initiative the Ministry and Environment and Forests
and the Planning Commission are launching on green national accounts. An
expert group is being set up under the chairmanship of Sir Partha Dasgupta
of Cambridge University widely acknowledged to be the guru on this subject
to prepare a roadmap for India to estimate and publish GDP numbers that
incorporate environmental costs as well.
VII
India’s coal resources are expected to run out of 45 years. Is that the end of
our dreams of inclusive and sustained economic growth? We need to be
aggressively grasp technology transitions within coal, hydel and nuclear.
There will be technology innovation and advancements making renewable
energy more viable, fresh sources of primary energy, like shale gas and
improved grids. India would need to be at the forefront of these
developments.

I would like to return to the beginning once again, to the Limits to Growth.
One of the drawbacks of this influential text was that it completely ignored

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technological fixes and interventions and their impact. In pushing the limits
to growth, we need to actively pursue technology and innovations, both of
technology and practices. In pushing forth a sustainable growth path, we
need to focus far more on innovation than we do today.
VIII
I suppose since this is a convocation address, I must say something for the
graduating students as well. I don’t want to sound preachy though. You are
all social scientists and bring a valued perspective to the problematique of
economic growth and ecology. What I would like to stress to all of you is that
your perspective should be free from prejudices, if not passions. I find,
unfortunately, a bias against economic growth and technology in the social
science fraternity at large. I would expect all of you to be tough and
searching critics sensitive to larger social concerns but please do not become
vociferous techno-phobes or growth-sceptics. Thanks to that outstanding
symbol of technology and growth—the Internet—India is seeing the
emergence of a well-networked community of neo-Luddites. But remember
that even the much-reviled Luddites were very selective in their approach in
the 18th and 19th centuries when the Industrial Revolution was at its peak.
I wish all of you the very best.

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