Is Exponential Growth Inclusive?

Many years back there was an article in the Magazine of CA institute. It had a table with three columns. Each column had high sounding syllables. You could randomly pick out one syllable from each column and coin a new idiom that sounded intellectual.

The recent speech by Rahul Gandhi is a similar exercise. It only appears to me as an exercise in cut and paste from various sources. Two ideas that sounded jarring to me was Inclusive Growth” and “Exponential Growth”. To a novice like me, the two sounded incompatible. For a change, this set me thinking. Something that I have rarely done in my life. Please put up with my childish attempts at understanding the rocket sciences involved.

The full text of Rahul Gandhi’s speech is available here. The first idea that struck a chord with me is this:

A rising tide doesn’t raise people who don’t have a boat. We have to help build the boat for them. It is not good enough to raise the tide, we have to give them the basic infrastructure to rise with the tide. What is the basic infrastructure? The basic infrastructure as designed by the UPA, is the rights-based paradigm.

After probably 100 more words he came to the next idea.

As we have moved forward to meet these challenges, we must remember we have a tendency in India to think about solving our problems incrementally. This is a mistake. There are some problems, which require exponential solutions. Whenever India has done well it has done so not by incremental steps but by radically transforming its structures. Look at our successes – from the green revolution to the white revolution to the IT and telecom revolution.

I sorely want to reconcile these two statements.  An excerpt from Dr. MMS speech on this subject in July, 2011.

“We clearly need a second green revolution that is more broad—based, more inclusive and more sustainable; we need to produce more without depleting our natural resources any further,” Mr. Singh said.

India had produced a record 241 million tonnes of food grain in the season July 2010 to June 2011, 23 million tonnes more than the previous year.

With a population of 1.2 billion that has grown at the rate of 17.64 per cent over the last decade, the demand for food grain was projected to touch 280 million tonnes by 2020—2021.

Rapid development had increased incomes of poorer sections of society fuelling the demand, Mr. Singh said. But more needed to be done as India continued to face a major problem of under—nutrition, particularly among children and women, he said.

It is obvious that for atleast last two years the UPA government has been grappling with this seeming paradox – how to reconcile exponential growth with inclusive growth. Dr. MMS is candid that he has to tackle it. Rahul Gandhi talks of them as parallel issues with no seeming connection. But let us see what “International Food Policy Research Institute” has to say on the same:

The Green Revolution in Asia stimulated a large body of empirical literature on how agricultural technological change affects poor farmers. Critics of the Green Revolution argued that owners of large farms were the main adopters of the new technologies because of their better access to irrigation water, fertilizers, seeds, and credit. Small farmers were either unaffected or harmed because the Green Revolution resulted in lower product prices, higher input prices, and efforts by landlords to increase rents or force tenants off the land. Critics also argued that the Green Revolution encouraged unnecessary mechanization, thereby pushing down rural wages and employment.Although a number of village and household studies conducted soon after the release of Green Revolution technologies lent some support to early critics, more recent evidence shows mixed outcomes. Small farmers did lag behind large farmers in adopting Green Revolution technologies, yet many of them eventually did so. Many of these small-farm adopters benefited from increased production, greater employment opportunities, and higher wages in the agricultural and non farm sectors. Moreover, most smallholders were able to keep their land and experienced significant increases in total production. In some cases, small farmers and landless laborers actually ended up gaining proportionally more income than larger farmers, resulting in a net improvement in the distribution of village income.
Development practitioners now have a better understanding of the conditions under which the Green Revolution and similar yield-enhancing technologies are likely to have equitable benefits among farmers.These conditions include: (1) a scale neutral technology package that can be profitably adopted on farms of all sizes; (2) an equitable distribution of land with secure ownership or tenancy rights; (3) efficient input, credit, and product markets so that farms of all sizes have access to modern farm inputs and information and are able to receive similar prices for their products; and (4) policies that do not discriminate against small farms and landless laborers (for instance, no subsidies on mechanization and no scale biases in agricultural research and extension).These conditions are not easy to meet.Typically, governments must make a concerted  effort to ensure that small farmers have fair access to land, knowledge, and modern inputs.

We are repeatedly told there is very little that can be conveyed in a 45 minutes speech. Agreed. But least one can expect is acknowledgement that these two are ideas that needs to be counter balanced and are not two unconnected ideas. And more importantly there is nothing new in what Rahul Gandhi spoke about. Dr. MMS had spoken about it two years earlier and the UPA is still clueless how to go about it.

To explain this paradox in simple terms, I need to go back to an incident that happened in 2003. I had developed a process to make a chemical by using a particular equipment. As it was not an established process and the chemical not commonly used, I scaled up the equipment only to make 150 Kgs at a time (in a 4 hour process). As demand picked I replicated the equipment. Now my capacity was 280 Kgs in 4 hours. But demand went up to around 50 MT per month with only one customer. I had to take a call. Make crude copies of existing size or go to a reputed manufacturer who would charge me heavily and the minimum size would be 100 MT per month. The other problem was I had only one customer who might ditch me.

I explained my paradox to the supplier. His reply is one statement I always go back to in life – Sridhar! You can’t match the two constraints Capacity and Demand perfectly. It is like walking when you want to move both legs together. You will not be able to. One leg has to lead the other alternatively.

Paradox between Exponential and Inclusive growth is roughly the same. You cant do both together but the two can be achieved in the long run. The UPA doesn’t seem to understand this.

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