Context:-
Last month, India protested against its ranking on the Environmental Performance Index (EPI) of 2022, prepared by researchers at the Yale and Columbia Universities in the U.S. The report measures 40 performance indicators across 11 categories to measure the “state of sustainability around the world.” India was ranked last (180) with low scores across a range of indicators. The Indian Government as well as environment experts have pointed to the faulty methodology of the index that skews the results in favour of the Global North.
What are the issues with the methodology?
Rating by its very nature is a subjective exercise. But a good rating is one that tries to reduce subjectivity, normalises all indicators, and then develops consensus around the subjective issues. The first step is to remove subjectivity as much as possible. Every rating will end up comparing apples with oranges, if you don’t normalise the indicators. So, the second step is to normalise indicators. Third, if there is subjectivity, you get experts to generate consensus around it. All three have not been done.
Can you give an example of where this lack of normalisation has impacted India’s rank in a category?
EPI has used tree cover loss as an indicator to rate deforestation in a country. Eritrea is the best country [as per the ranking]. The total dense forest cover in Eritrea is only about 50 hectares, which is similar to forest cover in one part of Lutyens’ Delhi. How do you compare absolute tree cover loss of a country with 50 ha dense forest with, say, India with millions of ha of dense forest and a tree cover loss of 1 lakh ha?
How is Brazil ranked much higher than India, despite rampant deforestation in the Amazon rainforest?
There’s a real problem because habitat is being measured in terms of what percentage of the country is under protection. Brazil could be doing well because it’s a big country with a relatively low population density. A significant percentage of Brazil is under protected area. But in a densely populated country like India, you are not going to be able to put a high proportion of area under strict protection.
In preparation for the upcoming COP 27, what should India be doing, especially since we’ve seen an increased coal production target?
The Russia-Ukraine crisis could have been an opportunity for all of us to start investing massively in renewable energy. But fossil fuel companies have used this short-term deficit in energy supply as an opportunity to open new fossil fuel establishments. In India, fossil fuel consumption is going to increase in the short term. If we are smart, we will try and peak coal as quickly as possible. That would be our roadmap.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.