Measuring Sustainability with Macroeconomic Data for India

Purnamita Dasgupta and Shikha Gupta ()
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Purnamita Dasgupta: Indian Council for Research on International Economic Rela
Shikha Gupta: Indian Council for Research on International Economic Rela

Indian Council for Research on International Economic Relations, New Delhi Working Papers from Indian Council for Research on International Economic Relations, New Delhi, India

Abstract: This paper investigates certain macro data on the Indian economy to draw inferenceson the sustainability of the economic growth experienced over the last couple ofdecades. Interpreting sustainability in terms of the maintenance of different forms ofcapital to ensure that future consumption levels are at least as high as current levels,estimates of investment have been made using theoretically consistent models anddata relevant to the Indian context. Subsequently, the paper investigates the extent towhich the investment that has taken place over a thirty year period (from 1976-77 to2004-05) has been aligned with the consumption path. Investment estimates are foundto be a reliable indicator of sustainability of the future consumption path and averagefuture consumption is likely to be higher than current consumption. The findingsreveal that while capital formation in manufactured assets has been fuelling wealthaccumulation in the economy, there has been a rise in the degradation of natural capital stocks. However, considering the aggregate picture, taking note of investmentin human capital, produced capital and the depreciation of natural capital, there hasbeen net wealth accumulation in the economy. Per capita wealth has been rising overthe period, with a sharp rise observed from the mid 1990s onwards.

Keywords: Sustainable Development; Investment; Future Consumption; Per Capita Wealth; Human and Natural capital (search for similar items in EconPapers)
JEL-codes: O11 Q56 (search for similar items in EconPapers)
Pages: 27
Date: 2008-05
New Economics Papers: this item is included in nep-cwa, nep-env and nep-mac
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