February 19, 2020
Home  »  Magazine  »  Business  » business: economists’ war »  Their Common Threads

Their Common Threads

Growth vs development, Bhagwati vs Sen. Both are right, say experts.

Their Common Threads
Their Common Threads

“Can I not talk about Bhagwati, please? I don’t like talking about Bhagwati. He loves talking about me, I do not like talking about him.”

Amartya Sen, Telegraph

“You must ask Professor Sen, not me, why he will not engage in a debate with me…. After all, he is the one who used the phrase ‘argumentative Indian’ to describe Indians.”

Jagdish Bhagwati, Economic Times

“Ours is not a growth story. They (Bhagwati and Panagariya) argue that growth matters, we absolutely agree. We’d like to go much further than that.”

Amartya Sen, Telegraph

“The truth of the matter is that Mr Sen has belatedly learned to give lip service to growth, which he has long excoriated as a fetish.”

Jagdish Bhagwati, Economist

“It is a bit exasperating that critics jump to cry ‘unaffordable’ only when the beneficiaries are the poor and the hungry, rather than the well-fed users of subsidised electricity, subsidised diesel, subsidised cooking gas, artificially cheapened fertilisers, or import-duty free gold from abroad.”

Amartya Sen, Tehelka

“”I would say Prof Sen is relying on estimates that are on such shaky ground that every serious analyst should at least question rather than regurgitate them.”

Arvind Panagariya, Economic Times

I don’t think Narendra Modi is fit to be the prime minister of India

Amartya Sen, Outlook

“That Gujarat has done extremely well on growth and, more important, on changes in social indicators, is undoubtedly true. Narendra Modi is known for his integrity.”

Jagdish Bhagwati, Tehelka


Typically, a neat term in economics—regrettable necessities, or things we need, but can actually do without—would best describe the headline-grabbing import of two senior and globally influential economists slugging it out in the public domain. It all sounds important, but you’d hardly expect a debate about India’s growth versus its development between Nobel laureate Amartya Sen and globalisation guru Jagdish Bhagwati to set the Yamuna on fire.

Haven’t Profs Sen and Bhagwati (along with his colleague Arvind Panagariya) been sniping at each other on this very topic for over three years? More importantly, don’t they both have new books to sell? True. But surprise, surprise, the spat between them is playing out in the public domain. Given the backdrop of a plunging rupee and elections around the corner, their cut and thrust has become part of the raging debate over India embarking on the Food Security Bill to ensure food at nominal cost to around two-thirds of the population.

‘The state needs to provide resources, safety nets, like jobs for the poor, else the development mode is flawed.’
Pradeep S. Mehta, Secretary-general, CUTS Intl

The positions are evident in the titles of their new books. In April, Bhagwati and Panagariya released Why Growth Mat­ters, where they push for more reforms to fuel India’s (currently) flagging growth engine and in the process pull out more people from poverty. More recently Sen, along with co-author Jean Dreze, has launched An Uncertain Glory, where they argue that economic growth is a pointless goal if not dovetailed with a  plan to have state-supported social inve­s­tments to help millions of India’s poor.

The politics comes from the fact that though both economists are close to PM Man­mohan Singh, Sen is weighing in clearly in favour of the UPA—recently def­­ending the UPA’s decision to opt for the ordinance route for the food security bill. This has upset many economists arg­uing against the bill. As journalist Tav­leen Singh, a critic of the government,  tweeted, “Sad that the PM decided to listen to his friend Amartya Sen and not his other friend Jagdish Bha­gwati!”

There’s an added political edge—if Sen has praised the Kerala and Bihar model of state-led development, Bhagwati has upheld the Gujarat model of entreprene­urial- and market economy-led development. Bhagwati and Panagariya have openly admired the BJP’s Narendra Modi, thus drawing support from vocal right-wing critics of Sen.

Politics apart, there’s enough general gloom in the air—and disenchantment with the UPA—pushing eminent commentators to weigh in. “Sen and Dreze energetically make the case for a more activist state. But—to this reader at any rate—their prescriptions seem too generalised, exhortations rather than operable instructions,” writes Ramachandra Guha in The Financial Times, London.

While hard-nosed politics has added a zing to the debate, experts say that in reality, it hasn’t generated widely divergent views. What seems to be emerging is a consensus—while growth is a necessity for generating resources to address poverty, the quality of growth is equally important to improve conditions of life. “Growth is not a substitute for targeted intervention, as many will not be able to benefit. At the same time, redistribution is not a substitute for growth as it cannot make up for opportunity lost as a result of slow growth,” says Subir Gokarn, dir­ector of research, Brookings India, and former deputy governor, RBI.

Commending Sen and Dreze for bringing the condition of the life of people into focus, Prof Jayati Ghosh of JNU clarifies that she supports growth provided it is alone inclusive. “This notion that growth will deliver everything should have been buried a decade back. Growth on its own does not give you better education, health, nutrition and, most importantly, jobs,” she says.

‘Bhagwati is a bit more right in the debate as he’s saying don’t take your eyes off growth as that’s where revenue lies.’
S.L. Rao, Ex director-general, NCAER

Even economists who admit to lea­ning towards Bhagwati feel there is need to focus more on the quality of reforms to ensure that more people move into organised sectors and better infrastructure is created to link people to avenues of growth. “I feel that growth and equity should be tackled simultaneously. It sho­uld not be seen as sequential,” says S. Mahe­ndra Dev, director, IGIDR.

“The way it is being posed is in the extreme, and that is not how most of us look at the question of growth and redistribution,” adds Ila Patnaik of the Nati­onal Institute of Public Finance and Policy. She stresses that you need growth to have a large cake in the first place, to be able to redistribute slices of it finally  to the needy. At the same time, Patnaik, like many others, feel redistribution has to be more effective.

While there is room for social welfare, the government has to keep the ‘consequences in mind’ if it does not want to mess up its targeted fiscal discipline. “In the debate both are right. Possibly, Bha­gwati is marginally more right as he is telling the state not to take eyes off the growth ball, as growth is where you are going to get more revenues to fund the social welfare schemes,” says former director-general of NCAER, S.L. Rao.

Anyway, for all the hopes on food security, it’s not going to provide much-needed nutrition, sanitation, water and opportunity for employment. For that the people will have to depend on political will and better governance. And that’s something even the two economists will agree are simple necessities.

Next Story >>
Google + Linkedin Whatsapp

The Latest Issue

Outlook Videos