ENVIRONMENT, HUMAN DEVELOPMENT AND
ECONOMIC GROWTH AFTER LIBERALISATION:

AN ANALYSIS OF INDIAN STATES

Sacchidananda Mukherjee and Debashis Chakraborty

Abstract

Economic growth does not necessarily ensure environmental
sustainability for a country. The relationship between the two is far more
complicated for developing countries like India, given the dependence of
a large section of the population on natural resources for livelihood. Under
this backdrop, the current study attempts to analyze the relationships among
Environmental Quality (EQ), Human Development (HD) and Economic
Growth (EG) for 14 major Indian States during post liberalisation period
(1991-2004). Further, for understanding the changes in EQ with the
advancement of economic liberalisation, the analysis is carried out by
dividing the sample period into two: Period A (1990-1996) and Period B
(1997-2004). Forboth the sub-periods, 63 environmental indicators have
been clustered under eight broad environmental groups and an overall
index ofEQ using the HDI methodology. The EQ ranks of the States exhibit
variation overtime, implying that environment has both Spatialand temporal
dimensions. Ranking of the States across different environmental criteria
(groups) show that different States possess different strengths and
weaknesses in managing various aspects of EQ. The HDI rankings of the
States for the two periods are constructed by the HDI technique following
the National Human Development Report 2001 methodology. Weattempt
to test for the Environmental Kuznets Curve hypothesis through multivariate
OLS regression models, which indicate presence Ofnon-Iinear relationship
between several individual environmental groups and per capita net state
domestic product (PCNSDP). The relationship between EQ and economic
growth however does not become clear from the current study.
The regression results involving individual environment groups and HDI
score indicate a slanting Nshaped relationship. The paper concludes that
individual States should adopt environmental management practices based
on their local (at the most disaggregated level) environmental information.
Moreover, since environmental sustainability and human well-being are
complementary to each other, individual States should attempt to translate
the economic growth to human well-being.

Keywords: Environmental Quality; Economic Liberalisation; Economic
Growth; Human Development; India.

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