It’s Bhagwati over Sen and Growth vs Equity

Ranabir Ray Choudhury

India is a huge country, its people having contributed significantly to many fields of human endeavour, not least to the theatre of the human mind. These achievements have done us as a people proud.

Given this background, can be any justification for blowing up differences in opinion between two brilliant Indian economists, Amartya Sen and Jagdish Bhagwati, who have made their mark in their specialised areas of economic thought and analysis?

Distortions in perception

The Indian media is responsible for, first, making icons of people who are really just one among many such “icons” on the national and international scenes and, secondly, of milking situations in which the icons find themselves — leading to distortions in the perception of what should make news and what should not.

Both Bhagwati and Sen have built up a corpus of work on economic development, the former focusing on growth, the latter on “social integration” which would make the “growth” meaningful in any society. This reminds one of the growth-versus-distribution divide of the past. In Sen’s view, special emphasis has to be put on sectors such as education and healthcare if “growth” is to carry any real meaning for the people. Bhagwati’s view is that anti-poverty programmes actually increase poverty; growth is the best anti-poverty antidote.

Incapable of delivery

Sixty years of Independence have made it crystal clear that Indian administration is simply not capable of delivering results in fields such as education and healthcare, which will make a material difference to the future “growth” of the country. Even if funds are allocated to these two sectors on a substantial scale by policymakers — which is unavoidable given the huge scale of task in hand — there is no guarantee that implementation of the projects concerned will be done in the right way so that every rupee spent makes it mark at the ground level.

A very basic assumption is that “leakage” of funds is kept to a minimum, a sine qua non of the entire exercise, in view of the overall scarcity of resources of the Indian exchequer — which, however, is a difficult one to make, going by prevailing trends. Corruption is on the rise everywhere, and there are no indications of the trend being reversed, or even halted.

It is true that a couple of States, such as Kerala, may have made some “progress” , but they probably form the exception to the general rule in the country, which is quite disheartening.

The unsatisfactory state of the nation’s politics and the plummeting quality of its administration point to the feasibility of the Bhagwati model of economic development -- more growth and less social welfare; poverty will take care of itself -- in Indian conditions, which is marked by a strong trickle-down element. Sen’s view requires effective State intervention, the availability of which is becoming increasingly questionable.