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Sen, Bhagwati: speak same tongue

The Amartya Sen vs Jagdish Bhagwati debate has led the discourse in the media over the past few weeks. The insipid have called it the ‘redistribution vs growth’ debate or worse, a debate between the ‘economic ideologies’ of Rahul Gandhi and Narendra Modi. Sen is accused of favouring ‘redistribution’ over growth, of being anti-market, and thus endorsing a food security bill that is statist, fiscally irresponsible and apparently does little to meet its objective. Bhagwati, on the other hand, is condemned (or celebrated?) for falling for the Modi-mania, and being a neoliberal ‘market fundamentalist’. Moreover, following a positive review of Sen’s latest collaboration with Jean Dreze, Sen and Bhagwati have traded charges directly.

The lagging growth rate and the rupee slide will continue to provoke a fiery discussion of ideas regarding India’s economic future in editorial pages and columns. However, a serious understanding of the most towering Indian economists in the world arena must begin with an appraisal of their seminal works, and avoid the sort of facile stereotyping that exists in media headlines.
Generally speaking, both Sen and Bhagwati have written much to explain and influence India. Bhagwati, from his perch in Columbia University, tirelessly petitioned the Indian state to dispense with the ‘licence raj’ and get on the right side of history. Soon, he was anointed the intellectual father of the monumental reforms of the early 1990s, which (perhaps for the first time in the subcontinent’s history) allowed a rapid increase in the creation of wealth. Sen, on the other hand, put up an impressive defence of democratic freedoms of India at a time when East Asian economic success made authoritarianism fashionable.

What do these luminaries have to say about the Indian project, especially after the two decades of market reforms? Is there really, as mainstream reporting suggests, a profound dichotomy between their views? Jagdish Bhagwati, in India’s Tryst with Destiny: Debunking Myths that Undermine Progress and Addressing New Challenges, co-authored with fellow Columbia University economist Arvind Panagariya, writes a pamphlet-like manifesto glorifying the rightward turn of Indian
policy making in the early 1990s, with specific recommendations for the future. In the first part, they engage in some ‘myth-busting’; assuming these to have unnecessarily plagued the Indian public discourse. Then begins a diatribe against the lefties that consider the post 1991 reforms to have made the ‘rich richer and the poor poorer’, done little to eradicate poverty or bypassed the lower castes. With convincing evidence, the authors posit that reforms have led to a decline in poverty by pulling some 190 million people out of poverty between 1983 and 2006 (with the Tendulkar poverty line as the benchmark – about Rs. 35 per person per day), benefited the lower castes as much and certainly not led to a deterioration of inequality – India’s Gini coefficient remains below those of the USA, China and Russia.

Yet more controversially, they claim that India’s much derided malnourishment number is a myth. The fact that roughly half of our children are too short or too light for their age is amongst the biggest embarrassments for the Indian middle-class. However, Bhagwati and Panagariya argue that the number may be much lower and point to the very serious ‘measurement issues’ and genetic differences. Using the same standards to judge a Norwegian and an Indian kid is, in the view of the authors, erroneous.

But many of the above ‘myths’ – inequality, poverty and educational and health standards – form the spine of what Sen and Dreze call India’s ‘uncertain glory’. Sen and Dreze’s book is censorious and expository as opposed to the congratulatory tone of India’s Tryst with Destiny. For Sen and Dreze, while the market may have uplifted growth rates and ended years of sclerosis, the Indian state in its obsession with growth has failed to ensure equity and fairness. With reference to a volume of data from comparable nations across history, Sen and Dreze show how poorly the Indian state has been able to tackle the problems of literacy, infant and maternal mortality, malnourishment, and of general welfare.

At a time when the other BRIC economies have attained near-universal literacy, India remains at a measly 74 per cent. Varied surveys have repeatedly pointed out that often one out of two public school teachers do not teach well or don’t come to the class. And healthcare has surprisingly been largely neglected in policy and public discourse, despite it being one of the ‘most important things in life’. Their most powerful argument is the exposition of the ‘special nature’ of inequality in India. Inequality in India cannot simply be assessed through income and expenditure measurements alone. Because ‘when the income levels of the poor are so low that they cannot afford even very basic necessities, the gulf between their lives and those of the more prosperous… has an intensity that aggregate inequality indicators cannot capture’. The book ends with an extremely well-written and scathing indictment of the Indian media, noting its ‘serious lack of interest in the lives of the Indian poor’. In the fine supply-side economics tradition, India should revamp its legal infrastructure for labour-hiring and land acquisition to make it easier for businesses to hire and fire, and set up factories. Serious efforts also need to be made in building infrastructure and ensuring enough power for a smooth industrial take-off.

On arrangement with Governance Now
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