Wednesday, August 21, 2013

Growth Vs Development Debate

Everything you wanted to know about the Sen-Bhagwati debate

The debate between two of the finest Indian economists—Amartya Sen and Jagdish Bhagwati—reflects the deeper question facing India’s political leaders

 The debate on economic policy has never been as riveting as it is today, with two giants from the world of academic economics, Amartya Sen and Jagdish Bhagwati, tackling each other on what India’s governance priorities should be. Sen is a Nobel Prize winner in economics and a professor of economics and philosophy at Harvard University. Bhagwati is a Columbia University professor of economics, who has been nominated for the top honour several times. Along with Sen and Avinash Dixit, he is considered to be among the three greatest Indian economists ever.
While Sen believes that India should invest more in its social infrastructure to boost the productivity of its people and thereby raise growth, Bhagwati argues that only a focus on growth can yield enough resources for investing in social sector schemes. Investing in health and education to improve human capabilities is central to Sen’s scheme of things. Without such investments, inequality will widen and the growth process itself will falter, Sen believes. Bhagwati argues that growth may raise inequality initially but sustained growth will eventually raise enough resources for the state to redistribute and mitigate the effects of the initial inequality.
Here are some of the best reads that capture the essence of the Sen-Bhagwati dispute:
In a 10 July story, Mint’s executive editor, Niranjan Rajadhyaksha outlined the contours of this debate and its significance in the national discourse. Rajadhyaksha pointed out that what appears to be an academic debate at first glance has a deeper political undertone. While Sen and his collaborator Jean Dreze are supporters of the entitlement-based public schemes launched by the Congress-led United Progressive Alliance government, Bhagwati and his long-time collaborator are unabashed admirers of what they call the Gujarat model of development. The Bhagwati-Sen fight thus underpins the contest between Narendra Modi and Rahul Gandhi for the spoils of 2014.
Gandhi vs Modi is actually Sen vs Bhagwati

Bhagwati-Sen and India's fight against poverty

V.S. Sambandan of The Hindu Centre for Politics and Public Policy critically assesses the implications of a recent debate, between distinguished economists Amartya Sen and Prof.Jagdish Bhagwati, that revisits issues of growth and equity, saying that to better understand, and gain, from the debate, it is essential to place it in the context of India’s fight against poverty and the performance of its social sector.

It’s been described as a war of words between India’s two internationally renowned economists: Amartya Sen and Jagdish Bhagwati. To the pessimist, it was a clamour to outsell books by the distinguished authors – not really an argument, but more of a cynical wag’s dismissive taunt. To the over-interpretative media, it was a proxy Rahul Gandhi Vs Narendra Modi for the real Congress Vs BJP clash of the political parties in the next Lok Sabha elections.
To economists it is a matter of much more significance as this relates to core policy-making in a developing economy that aims to reduce its stubborn poverty. The questions that arise are both economic and political. In the area of economics, the key ones are what economic tools does a state use to provide a boost to growth and reduce poverty, and what is the role of the state, specifically, in economic policy making that address social issues?

Economists on the Wrong Foot

The rather banal Amartya Sen-Jagdish Bhagwati debate that is being played out in the Indian media misses out what is, in many ways, the  crucial third agent (beyond the state and the market), in whose name development is carried out: people organised as communities and collectives. 
Ashish Kothari and  Aseem Shrivastava are the authors of Churning the Earth: The Making of Global India (Penguin Viking, New Delhi, 2012). 
The ongoing debate between two stalwart economists, Amartya Sen and Jagdish Bhagwati, must be joined by those who understand contemporary realities and challenges in terms altogether different from those of mainstream economists. In a recent (July 27) article in Times of India, Bhagwati’s co-author Arvind Panagariya characterises the differences between the two in the following terms. Sen favours education and health measures as being the first steps to tackle poverty and other ills that beset India, while Bhagwati (and Panagariya) prefer rapid economic growth. Presumably the wealth generated by the latter will then be utilised to tackle deprivations of various kinds. Secondly, Sen advocates  strong interventions through social welfare schemes, reaching food, jobs, education and health through the bureaucracy, whereas Bhagwati prefers to empower people through measures like cash transfers, through which they can choose private or public providers of these services.
There is more in common between Sen and Bhagwati than is usually noticed, especially in what is missed out. Firstly, their debate is characteristic of the clichéd Left-Right positions, which seem to posit only two agents of development: the state and the private sector. This misses out what is, in many ways, the  crucial third agent, in whose name development is carried out: people organised as communities and collectives, people seen not as “beneficiaries” of the state or “consumers” of private services but as drivers of their own destiny, empowered to self-provision basic needs and to govern from below. It should be obligatory for democrats to privilege communities as makers of their own destinies and to recognise their ongoing initiatives in that direction. We will come back to this shortly.
Read full article in EPW website

The Bhagwati-Sen Debate: An Epitaph
Jagdish Bhagwati writes for Business Standard, says he wants to put an end to the controversy that took a political twist, thanks to Mr. Sen 

While I was among the intellectual pioneers of the Track I reforms that transformed our economy and reduced poverty, and witness to that is provided by the Prime Minister’s many pronouncements and by noted economists like Deena Khatkhate, I believe no one has accused Mr. Sen of being the intellectual father of these reforms. So, the fact is that this huge event in the economic life of India passed him by.
Mr. Sen would like us to believe that Track II expenditures at the outset would have reduced poverty and even produced growth. But beyond assertions, he has no convincing argument on his side. As I (and Professor Panagariya) argue, India had too few rich and too many poor. Redistribution (i.e. taking moneys from the rich and distributing it to the poor) would have increased their well-being only marginally. Growth had to come first, then “redistribution” from the enhanced revenues unless God was to drop manna from heaven! Mr. Sen lives in a world of illusion.
Read Full Article in Business Statndard
ALSO READ: It is nonsense to say I am batting for Narendra Modi: 
ALSO READ: Bhagwati versus Sen: What's going on?
ALSO READ: Sen vs Bhagwati: Parallels from an earlier titanic clash

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