When growth divides
Source: By Pavan K. Varma: The Asian Age
If growth just makes those who are rich richer, and does not impact in equal measure the plight of the poor, then while it may still reduce poverty, it needs course correction and equitable direction.
I am a little mystified about the Jagdish Bhagwati Amartya Sen controversy. Economists of such repute can have differences of opinion on how to best deal with the massive problems of poverty and deprivation in India, but to me their differences are not so wide and intractable as to justify the kind of acrimony and bad blood that we have recently seen.
From what I can understand, Dr Bhagwati appears to be emphasising the importance of high economic growth rates, but I do not believe that he is against targeted interventions at the level of the state for the specifically deprived. Similarly, Dr Sen seems to be emphasising the importance of growth with equity and, in this context, the importance of state interventions for the specifically deprived, but I do not believe that he is against high economic growth rates.
If this, indeed, is the crux of their differences, it appears to be more a matter of relative emphasis within the overall matrix of strategies to deal with poverty and hunger in India, and not an insurmountable polarity as it is being made out to be.
My own view -and I am not a trained economist -is that India needs a bit of both approaches. Chanakya emphasised 2,000 years ago that economic prosperity is the backbone of a nation's strength. If the treasury is empty, all promises are slogans, and all pretensions to power are so much hot air. Obviously, therefore, India needs high economic growth rates, which generate the req uisite revenues to deal with poverty. Indeed, any objective assessment will reveal incontrovertibly that when overall economic growth rates are high, the poor are benefitted more than when growth falls and populist policies are pursued. In the decade after the economic reforms of 1991, when growth rates for the first time rose to around eight per cent per annum, more people were raised above the poverty line than in the previous three decades of so-called socialism.
The co-relation between growth and poverty reduction is evident too in a state like Bihar, where poverty is endemic. The latest estimates from the Planning Commission show that Bihar saw one of the highest falls in the number of the absolutely poor in the past few years. It is not coincidental that in the same years Bihar also saw the highest economic growth rates, averaging around 11 per cent per annum. Estimates reveal that if India manages a growth rate of around nine per cent in the next five years it could redeem from below the poverty line about 100 to 150 million people.
This being said, it is important to also understand that growth is not an undifferentiated monolith. Jean Dreze and Dr Sen speak of the importance of “growth mediated development” where the priority is also equity, which essentially means that growth must be visible, too, in those sectors of the economy which are directly related to the interests of the poor. If growth just makes those who are rich richer, and does not impact in equal measure
The plight of the poor, then while it may still reduce poverty in some measure, it needs course correction and equitable direction. This is the essential plank of the “inclusive” model of growth, which Bihar chief minister Nitish Kumar, among others, espouses. India is a nation of many segments. There are the rich, the middle class, the poor, the very poor, the extremely backward and the dalits. Women and children require special attention too.
The vulnerable must not remain endemically hungry or denied health services and access to education. Further, within India as a whole, there is need for balanced development, where backward regions can also have opportunities for high growth.
Economic prosperity that does not embrace all of India in its vision is, given the vast numbers of our poor, flawed. We need to improve the instrumentalities to ensure inclusive development, but we cannot say that the latter is unimportant and only high growth rates which disproportionately benefit the already privileged must be the goal. Surely, Dr Bhagwati cannot disagree with this proposition.
I think the real reason why the Bhagwati-Sen debate has acquired high decibel acrimony is because both have become, willingly or unwillingly, accessories to larger political antagonisms. Dr Bhagwati is partial to Narendra Modi. Dr Sen believes the Gujarat model of development is flawed in many ways, not the least in the manner in which it has performed in the crucial areas of the development of human resources for the underprivileged. Dr Sen has also stated that Mr Modi would not be his choice for the post of Prime Minister, because of his past track record in handling the sensitive issue of minorities. The worrying thing is the manner in which the supporters of Mr Modi have lashed out at Dr Sen. I have known Chandan Mitra as a friend for decades now; we were contemporaries in St. Stephen’s; I have also been briefly a columnist in the newspaper he edits. His expostulation that Dr Sen should have his Bharat Ratna taken away because he has reservations about Mr Modi is preposterous and I am glad he has since apologised for it.
What I find even more disturbing is the tone of intolerance and intimidation that Mr Modi’s supporters are introducing to national discourse. The right to disagree is sacred in a democracy. We need only recall the many points of disagreement between Mahatma Gandhi and Jawaharlal Nehru, or between Nehru and Vallabhbhai Patel, and the civilised manner in which they expressed their differences, to understand the enormity of what seems to be going wrong. Dr Bhagwati and Dr Sen are becoming cannon fodder in this larger deterioration of the quality of our public discourse. As economists, I am sure they will be able to have an amicable discussion on where they disagree.
As agents co-opted in the increasingly intolerant political hostility being introduced in our polity, what they say and write is being distorted by some to suit extraneous political agendas.
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