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Beyond GDP: The economy of well-being

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Beyond GDP: The economy of well-being

Altaf Hussain Haji

All of us have heard about the term ‘standard of living which means all the elements in someone’s life that contribute to their happiness.   Standard of living is a broad term that encompasses many factors including some that are not bought and sold in the market.  The standard of living is an economic opportunity that focuses on basic material factors such as income, gross domestic product (GDP), life expectancy, etc.  It is closely related to the quality of life, which can also explore factors such as economic and political stability, political and religious freedom, environmental quality, climate, and safety. In the present scenario, economic growth is commonly taken to mean a sustained increase in real GDP per capita and somehow linked with social, economic, and environmental growth. There are a lot of challenges today regarding growth and standard of living.

To solve the social, economic, and environmental challenges faced today by governments and other institutions around the world that need to embrace new ways of thinking and actively engage in widespread systems innovation to make real progress toward a healthier and more prosperous life.

The economy of well-being highlights the need for putting people at the centre of policy. It is important to move away from an attitude of “grow first, redistribute and clean up later”, towards a growth model that is equitable and sustainable from the outset.

The well-being economy encompasses a diverse array of ideas and actions aimed at advancing social well-being through governance structures that support peaceful co-existence and meet basic human needs. A well-being economy provides people with equal opportunities for advancement, a sense of social inclusion, and stability—all of which contribute to human resilience and, importantly, sustains and supports harmony with the natural world. It aims to serve people and communities first and foremost and offers a promising path toward greater social well-being and environmental health. The current economic system s become addicted to “growth at all costs”, as measured by Gross Domestic Product (GDP) but ignores the wellbeing of the individuals at all levels of development. Instead, we need an economic system that takes a preventive approach to social and environmental challenges to ensure that the kinds of related, follow-on problems of the standard of living or a person’s happiness.

The level of GDP per capita, for instance, captures some of what we mean by the term standard of living, as illustrated by the fact that most of the migration in the world involves people who are moving from countries with relatively low GDP per capita to countries with relatively high GDP per capita.

The GDP is a limited tool for measuring the standard of living because many factors that contribute to people’s happiness are not bought and sold. The GDP includes what is spent on environmental protection, healthcare, and education, but it does not include actual levels of environmental cleanliness, health, and learning. GDP includes the cost of buying pollution-control equipment, but it does not address whether the air and water are cleaner or dirtier. GDP includes spending on medical care, but it does not address whether life expectancy or infant mortality have risen or fallen. Similarly, GDP counts spending on education, but it does not address directly how much of the population can read, write, or do basic mathematics.

The OECD is one such organization, which has been working on the measurement of well-being beyond GDP since the 1970s and has seen the concept of well-being develop from an interesting side-note into a well-established agenda for policy. As we know that the Organization for Economic Cooperation and Development (OECD) is an international organization that works to build better policies for better lives.  The main goal is to shape policies that foster prosperity, equality, opportunity and well-being for all at the international level. The OECD’s Well-Being Framework has further developed the concept by providing us with a clear definition and rigorous analytical basis. The Framework for Policy Action on Inclusive Growth has helped identify the channels through which governments can promote greater well-being and sustainable economic growth for all their citizens.

The economy of well-being highlights the need for putting people at the centre of policy. It is important to move away from an attitude of “grow first, redistribute and clean up later”, towards a growth model that is equitable and sustainable from the outset.

An economy of well-being has four main pillars. The first pillar is education and skills. Skills are the most important driver of long-term economic growth. The policy can help leverage the benefits of education. For example, higher attendance in pre-primary education, greater autonomy of schools, reduced gaps between academic and vocational branches of education and higher funding for tertiary education can all boost human capital, while also improving the efficiency of education systems. At the same time reducing inequalities of access and opportunity at school is essential to promote better educational outcomes, as countries with high levels of inequality in education and skills also record lower average educational performance.

The second pillar is health. Evidence shows that good health fuels economic growth, productivity and individual earnings. Good health is also a key factor for people’s well-being. It allows them to invest in education and skills, access quality jobs and enjoy a better quality of life.   It has seen that increased spending has driven much of the improvement in health outcomes, but we need to go beyond. This means looking at the range of services covered by primary healthcare, as well as addressing new or persistent risk factors. Reducing inequalities of access is also essential to promote better health outcomes, as the proportion of people in poor health weighs heavily on key health indicators. Moreover, health inequalities are often stratified along economic, educational or occupational lines. For instance, unmet care needs are substantially higher for low-income groups.

The third pillar is social protection and redistribution. Both play an important role in reducing economic volatility and fostering resilience. They also prevent inequality today from translating into inequality of opportunities for the next generation. Recent OECD research confirms that lower inequality is associated with higher GDP growth.  Combining income-support schemes with active labour market policies provides effective protection and supports employment. Promoting more progressive tax and benefit systems can help countries promote equality of opportunity and social mobility. Social protection systems also need to adapt to a changing world of work, notably by improving coverage for non-standard workers, and to evolving social risks, notably the increasing prevalence of lone-parents and frail elderly.

The fourth pillar is gender equality. Raising women’s employment and hours worked can deliver productivity gains and higher GDP growth. It can also reduce income inequality, strengthen resilience and consolidate the middle class.

There are many other dimensions to an economy of well-being, for instance, the quality of housing and infrastructures, as well as the equitable access to those; and of course the quality of the environment that significantly affects health outcomes, especially among the poorest.

The fact that GDP per capita does not fully capture the broader idea of the standard of living has led to a concern that the increase in GDP over time is illusionary. It is theoretically possible that while GDP is rising, the standard of living could be falling if human health, environmental cleanliness, and other factors that are not included in GDP are worsening. Fortunately, this fear appears to be overstated.

Since 1970, the air and water in the United States have generally been getting cleaner. New technologies have been developed for entertainment, travel, information, and health. A much wider variety of basic products like food and clothing is available today than several decades ago. GDP does not capture leisure, health, a cleaner environment, the possibilities created by new technology, or an increase in variety. Ignoring these factors, GDP would tend to overstate the true rise in the standard of living.

At the last to mention here, that during COVID19 pandemic in the whole world regarding health and well-being. The pandemic affects badly the standard of living due to the poor health system at every level and is continued to create many hurdles in the processes of wellbeing. It is difficult to maintain a healthy lifestyle when we are in the middle of a crisis like this. The uncertainty and worries related to finances, childcare, elderly parents, and job security disrupt our routines, our lifestyles and mental health. The uncertainty about the future, the ceaseless news coverage and a constant social media-driven flood of messages can increase our sense of anxiety. It is also important to maintain a healthy lifestyle and get back into a routine at this movement. This also showed how important is wellbeing as compared to gross domestic product nowadays.

Altaf Hussain Haji, ISS, is Deputy Director General National Statistical Office, Shimla. He can be contacted at altafhh@rediffmail.com

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Economy

Editorial | J&K Budget 2025-26 – A Balancing Act

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J&K Budget 2025-26

Fiscal Constraints Amidst Development Aspirations

J&K Budget 2025-26

Preparing the maiden budget for Jammu and Kashmir as the head of an elected government of a state downgraded to a UT and remaining under central rule without an elected government for more than seven years with overwhelming challenges was an arduous task for Chief Minister Omar Abdullah.

While his speech paints a hopeful picture of a “new and prosperous” J&K, a closer look reveals a delicate balancing act necessitated by fiscal realities and the people’s aspirations: high hopes with vivid memories of recent election promises.

As Omar Abdullah seeks to lay the foundation for ‘long-term growth, stability, and self-reliance’ of J&K, he has to walk a tightrope to keep the state’s mounting debt under control. However, his prudent management to keep the fiscal deficit under leash has come at a cost: a leaner budget. This year’s budget allocation of Rs 1.12 lakh crore is Rs 6080 crore or 5% less than last year’s budget announcement of Rs 1.18 lakh crore. The reduction in budget allocation, along with 4-5% inflation, raises concerns about the government’s ability to realise its ambitious development goals fully.

The CM’s speech, though, outlines a comprehensive vision, touching upon crucial sectors like rural development, agriculture, tourism, and industry. But translating these aspirations into tangible outcomes requires substantial financial investment. Moreover, the pervasive challenge of inflation adds another layer of complexity. Rising prices erode purchasing power, making it harder to stretch limited budgetary resources.

As Omar Abdullah seeks to lay the foundation for ‘long-term growth, stability, and self-reliance’ of J&K, he has to walk a tightrope to keep the state’s mounting debt under control. However, his prudent management to keep the fiscal deficit under leash has come at a cost: a leaner budget. This year’s budget allocation of Rs 1.12 lakh crore is Rs 6080 crore or 5% less than last year’s budget announcement of Rs 1.18 lakh crore.

The emphasis on fiscal prudence, curbing non-priority spending, and enhancing revenue collection is understandable, given J&K’s historical fiscal stress. However, austerity measures must be carefully calibrated to avoid stifling economic growth and hindering essential public services, especially when inflation is already squeezing household budgets.

The budget’s focus on digital governance and healthcare accessibility is welcome. Initiatives like the SEHAT app and the expansion of digital services have the potential to improve efficiency and transparency. Yet, the question remains: are the allocated funds sufficient to ensure the effective implementation of these programs, particularly when the real cost of implementation is escalating due to inflation?

The agricultural sector, a cornerstone of J&K’s economy, receives significant attention. The success of the Holistic Agriculture Development Program (HADP) will be crucial in boosting farmer incomes and creating employment opportunities. The allocation to HADP has been reduced Rs 800 crore from last year’s 1000 crore plus. However, the program’s impact will depend on the timely disbursement of funds and effective implementation, and whether the farmers can see real increases in their income, that outpace the rising cost of goods.

Similarly, the ambitious plans for tourism development require substantial investment in infrastructure and marketing. While the government’s efforts to promote offbeat destinations and sustainable tourism are laudable, the sector’s growth will depend on attracting private investment and addressing critical challenges like sustainability and waste management, while also dealing with rising operational costs due to inflation.

Some headline-making announcements like free rides for women in public transport and 200 free units of solarised power for AAY population fail to impress the general public. The argument is J&K has almost non-existent public transport. About 850 public buses with a passenger capacity of 35,000 people do not even suffice the transport needs of the 1% of the 1.2 crore population of J&K. The 200 e-buses for two metro capital cities, announced in last year’s budget, failed to take route. CM has repeated the announcement this year.

The government’s commitment to empowering MSMEs and startups is also noteworthy. However, ensuring access to finance and creating a conducive business environment will be essential for fostering entrepreneurship, and this becomes more difficult when inflation creates financial uncertainty. In last year’s budget, a good amount was announced under Youth Startup and Seed Capital Schemes but both schemes failed to take off.

Also, the budget is unable to address the burgeoning unemployment that, as per some private surveys, has reached 32%.

Whatever the allocations, the success of this budget will be now judged by its ability to deliver tangible benefits to the people of J&K. While the government’s efforts to reduce the fiscal deficit are commendable, it must also prioritize investments that will drive economic growth, create jobs, and improve the quality of life for all citizens, while also mitigating the effects of inflation.

The challenge lies in navigating fiscal constraints and inflationary pressures while maintaining momentum on the development path. This budget sets the stage for a critical year ahead, one that will test the Omar Abdullah government’s ability to balance its books and deliver on its promises, in a climate of rising prices.

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Economy

SKUAST-K to hold mega Science Summit on Aug 23-24

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SKUAST-K Mega Science Summit

Srinagar, Aug 21: Sher-e-Kashmir University of Agricultural Sciences and Technology of Kashmir is hosting a mega first-of-its-kind science summit ‘Kashmir Science Vision-2024’ on August 23-24 at Shalimar campus. The event is expected to bring together leading scientists, researchers, policymakers, entrepreneurs and scholars to discuss and develop science and technology policy for the sustainable future of Jammu and Kashmir with a focus on helping the UT to emerge as a model for Viksit Bharat@2047.

The Kashmir Science Vision Summit will feature a dynamic range of keynote lectures, panel discussions and brainstorming sessions.

These discussions will focus on key areas of regional development like Scientific Innovations & Entrepreneurial Opportunities for exploring how technology can be harnessed to drive socio-economic growth and create new business opportunities, Biomedical & New-Age Sciences for advancing healthcare through innovative medical sciences and improving health outcomes for the region’s residents. Food Security & Sustainability for promoting sustainable agricultural practices to ensure long-term food security and environmental health, Biodiversity Conservation & Disaster Management for developing strategies to protect the region’s unique ecosystems and mitigate the impact of natural disasters will also feature in the two-day summit.

The summit aims to foster collaboration among diverse stakeholders to ensure that scientific advancements translate into meaningful benefits for Jammu and Kashmir.

Vice Chancellor SKUAST-K Prof Nazir Ahmad Ganai said the summit will serve as a catalyst for the region’s sustainable development and strategic growth. “It will be remembered as the spark that ignited science and technology-led future-ready Jammu & Kashmir,” he added.

Pertinent to mention, SKUAST-K is a premier institution dedicated to advancing agricultural sciences and technology. With a commitment to innovation and excellence, the university plays a pivotal role in fostering sustainable development and technological progress in the region.

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Lenskart enters Kashmir market, opens shop at Regal Chowk

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Lenskart enters Kashmir market

Srinagar: Lenskart, India’s leading eyewear brand, has forayed into the Kashmir valley with the opening of its first outlet at Regal Chowk in Srinagar city. This expansion marks a significant milestone for Lenskart as it continues its mission to provide vision correction solutions to every individual across the country and beyond.

With seven successful stores already established in J&K UT’s Jammu city and plans underway for another outlet in Sanat Nagar, Srinagar, Lenskart aims to extend its presence to every nook and corner of Srinagar city.

“We have plans to expand our reach into other districts of Kashmir soon, ensuring accessibility to quality eyewear products and services for all residents,” said Dr Mohammad Mutaher Zerger, who heads Lenskart’s Portfolio and Franchisee Business Divisions.

Dr Mutaher is a seasoned professional with extensive experience in franchise management. Having previously served at McDonald’s, the new head of franchise at Lenskart brings valuable expertise in expansion strategies and operational excellence. “We are dedicated to providing state-of-the-art sophistication in eyewear technology, coupled with unparalleled customer service,” he added.

Lenskart’s commitment to accessibility and affordability is reflected in its offerings, including the innovative Buy One Get One (BOGO) facility available at all Lenskart outlets and online. Additionally, the brand provides complimentary eye testing facilities, ensuring that customers receive comprehensive care tailored to their needs.

Lenskart enters Kashmir market

Lenskart Founder, Shark Piyush Bansal’s Vision is to give correction-less vision to the entire India.

In line with its dedication to innovation and excellence, Lenskart recently inaugurated a cutting-edge robotic factory in Bhiwandi, where lens production and fittings are carried out with precision and efficiency. This advanced facility underscores Lenskart’s commitment to leveraging technology to deliver superior-quality products to its customers.

Lenskart enters Kashmir market

With a network of 1800 stores across India and a growing presence in international markets such as Singapore, Saudi Arabia, Thailand, and the UAE, Lenskart is poised for further expansion into other countries in the Middle East and Asia-Pacific regions.

Lenskart’s entry into Kashmir signifies not only its commitment to providing vision correction solutions but also its dedication to empowering individuals with the gift of clear vision, enabling them to lead more fulfilling lives.

 

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