In the midst of our economic woes in India, two of the world’s leading economists are debating on what the India’s future economic growth model should be. Amartya Sen and Jagadish Bhagwati are two of the eminent economists that India has ever produced. Both have a different point of view on the path that India should take in its quest for sustainable growth.
The debate of growth vs redistribution is simple, but it has nuances of all the economic theories ever put forth, from Adam Smith to John Keynes. Should India pursue growth at all costs and let the economics take care of lifting people out of poverty? (or) should India address social issues and income inequalities first which will pave way for sustainable growth.
If we see the competing economic ideas at national levels and political level involving India, they will more or less fall into these debates, be it China vs India or Modi vs Rahul.
Amartya Sen, argues for “inclusive growth” and questions how India will grow if its children or not fed, poorly educated and women die regularly while giving birth. An Uncertain Glory: India and its Contradictions, the book he co-authored, argues that India should fix public health, education, food security which will in turn drive the growth.
Jagadish Bhagwati, argues for a growth-led-development, and urges India to reach higher growth rate which will in-turn alleviate poverty. In the book that he co-authored,Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries, he roots for growth as a solution to all of India’s problems.
Unfortunately, both theories are based on assumptions that are not easy to apply universally in a complex and diverse country like India.
“Inclusiveness” theory assumes good governance, capacity of the state to identify and reach out to the needy and offer the right entitlements. Aadhar from Indian government is trying to achieve this, however our past record in public distribution is dismal.
“Growth matters” theory brushes aside corruption, marginalized social groups and deep rooted inequality in the society. Capitalism in its classical form could bypass the poor and illiterate. A brilliant article argues with data how this is already happening in India. We only have to look at China to understand that a blind pursuit of growth could lead to ticking social time bomb.
My personal take is these are not competing ideas but competing milestones in economic growth. It is not either-or, but rather how to sequence them or juxtapose them while maintaining a balance. As always in India there is no one answer.