The Scarcity Versus Development Dilemma


Post-Smithian economics largely revolved around the question of how the scarce resource can be used efficiently to satisfy the human wants. Yes, it is true that demand for each individual commodity is satiable; however it must be remembered that if we consume for more than what a demand requires, we are essentially denying the opportunity to utilize that commodity for some other purpose.

If you are a resident of any city in India, be it Bengaluru, Mumbai, Delhi or any other city, a common sight we come across in our lives is that of roads being dug up, roads being laid with poor materials, perfectly constructed buildings being demolished to raise a building according to the needs of the new owner. Road cutting happens for various reasons like laying of telephone / internet cables, laying pipes for transportation of water, laying pipes for transportation of gases like liquefied petroleum gas etc. When roads are cut for these purposed they have to be reconstructed, when this is done, there is wastage of resources that were initially used for construction of road and also additional wastage of resources which is used to re construct the road. The general materials required for road construction are asphalt, bitumen, coal, cement etc., if seen all these items are not renewable in nature or that they require longer duration for renewal. Most often the roads are cut multiple times for several of the above mentioned purposes, due to lack of planning. This leads to reconstruction of roads multiple times, which is an added wastage of the resource. Due to inefficiency of government authorities, sometimes, inferior quality goods are used to construct these roads. The roads are thus ruined easily with regular amount of rainfall or passage of  heavy vehicles. This calls for laying of roads again, which is an added burden on the already scare non-renewable resources.

The implications of using resources whose replenishment rates are very less is that there is increased scarcity. If certain resources are being wasted, proper allocation of these resources is not possible. Efficiency is not achieved. This is not good for an economy. Also, resources like tar, bitumen, cement etc. are essential resources that can be used for various other developmental purposes. Wastage of these resources being less of these resources for other developmental activities. According to economist Geoffrey Heal, necessary (though not sufficient) condition for efficient use of a resource is that the difference between its price and marginal extraction cost should rise over time at the rate of interest . If resources are being used in- efficiently, in the standard economic sense, then there is, so to speak, slack in the system and more economic value could be obtained from a given resource input.

One may argue that certain activities like construction of roads and buildings are essential as they create employment in a country massive unemployment. Employment  creates revenue and leads to better standard of living and purchasing power. But the creation of employment at the cost of losing essential non-renewable resources is not a worthy trade – off. This leads to not only wastage of physical resource but also much required human resources. But employment only depletes the resources that are already scarce and leads to inefficient allocation of resources.

Road cutting and road construction should be properly planned to ensure that there are less road cuttings, which will in turn help in reducing the wastage of resources that is caused due to unplanned repair of roads. It would further reduce the wastage of scare resources like bitumen Also, an efficient authority should be constituted to ensure that the quality of resources used is complied with. Every scare resource that is being used less is it being used for other purposes which will help in efficient allocation of resources. Efficient allocation of resources would facilitate the working of developmental projects.

In conclusion it can be said that though such kind of activities give rise to the much needed employment to the unemployed and acts as a solution to the employment problem in the country, which will in turn increase the standard of living and purchasing power of the people, the damage done to these renewable scarce resource is not worth the price. The government can invest more into research & development, and planning to ensure that there are less road cuttings, which will in turn help in reducing the wastage of resources that is caused due to unplanned repair of roads. It would further reduce the wastage of scare resources like bitumen. Every scarce resource being used prudently, is it being used for other purposes that will help in efficient allocation of resources.

-Contributed by Jiss Palelil

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