Business Standard / New Delhi Nov 27, 2009, 00:16 IST
Green is the colour of our times. In the run up to the Copenhagen Climate Summit, everyone is doing whatever is possible to establish one’s green credentials. Nowhere is such symbolic activity more in evidence than China. Despite its terrible track record on the environmental front, China has worked hard to earn brownie points from the media, non-governmental activists and other governments with a slew of initiatives. One such initiative was the idea of “Green GDP” launched by Prime Minister Wen Jiabao in 2004, with the first report published in 2006. No sooner was the report published than the initiative got shelved because the bad news was damming. It showed that the financial loss caused by pollution alone was 511.8 billion yuan ($66.3 billion). This was estimated to be 3.0 per cent of China’s GDP. However, other estimates placed the environment’s negative impact to be as high as 8-12 percentage points of GDP growth. Green gross domestic product (GDP) tries to deduct from regular estimates of national income the costs of environmental degradation and damage. In this age of doing what the neighbours do, India too has jumped on the green GDP bandwagon. The Union Ministry of Environment and Forests has asked the National Statistical Commission to come forward with estimates of a green GDP by year 2015. This lead time is required not just to develop concepts and verify estimates but to also clean up India’s regular national accounts.
Despite the rich heritage of high quality national accounts statistics, India’s GDP accounting has come in for questioning in recent years due to the poor quality of data. Several expert groups and commissions have tried hard to improve the quality of Indian national accounts. A National Statistical Commission has been set up to improve the administrative side of things. Yet, the quality of data is still below par. A large part of the problem is to do with quality of data collection and of the data collectors. A lesser part of the problem is conceptual, relating to use of shadow prices and such like devices to fill extant information gaps. All these issues are securing policy attention. Getting the GDP numbers right in black and white should be the first priority for the government, before too much effort is exerted on greening them. This is not to deny that estimating the environmental impact of development and the developmental cost of environmental degradation are both important policy objectives in their own right. Evidence on both counts is there for all to see. Of course putting a number to a problem always helps. But the government’s priority should be to effectively reduce environmental damage, whatever the quantitative dimension.
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