Gandhi vs Modi is actually Sen vs Bhagwati

Behind the political fight scheduled for 2014 is a duel of economic ideologies between Amartya Sen and Jagdish Bhagwati
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First Published: Wed, Jul 10 2013. 07 24 AM IST
BJP leader Narendra Modi and Congress party leader Rahul Gandhi. The debate between two of the finest Indian economists—Amartya Sen and Jagdish Bhagwati—reflects the deeper question facing the country’s political leaders. Photo: AFP & Getty Images
BJP leader Narendra Modi and Congress party leader Rahul Gandhi. The debate between two of the finest Indian economists—Amartya Sen and Jagdish Bhagwati—reflects the deeper question facing the country’s political leaders. Photo: AFP & Getty Images
Updated: Thu, Jul 25 2013. 04 48 PM IST
Mumbai: Bhagwati versus Sen may not have the same resonance as Modi versus Gandhi, but behind the political fight scheduled for 2014 is a duel of economic ideologies.
The protagonists of this cerebral combat are Jagdish Bhagwati and Amartya Sen, without a shred of doubt two of the finest Indian economists ever.
The political hue to the intense debate between the two old friends of Manmohan Singh is another reason why the ongoing intellectual scuffle between the two brilliant economic minds deserves to be followed.
Indeed, if Sen and his long-time collaborator Jean Drèze are supporters of the entitlement-led public schemes launched by the Congress-led United Progressive Alliance government, then Bhagwati and his long-time collaborator Arvind Panagariya are admirers of what they call the Gujarat model.
Sen is a strong supporter of the proposed right to food law while Bhagwati has lashed out at it. Drèze is a member of the powerful National Advisory Council that has the ear of Congress president Sonia Gandhi. And Panagariya has written in support of the economic policies of Gujarat chief minister Narendra Modi.
The academic paths of Sen and Bhagwati have not crossed in their long careers. They earned their fame in different areas. Bhagwati has made seminal contributions to trade theory. Sen did his best work in social choice. The two—along with peers such as Partha Dasgupta, T.N. Srinivasan and Avinash Dixit—have made contributions to economic theory that are on par with the best in the world.
Bhagwati and Sen are also gifted polemicists, commenting extensively on public policy. It is in the latter role that they have often crossed swords.
The debate between the two is an intricate one. But a simplified version would be as follows: Bhagwati believes that strong economic growth has directly improved the lives of poor Indians while Sen argues that India’s successful growth record has been tarnished by abysmal levels of human development.
The solutions also differ. Bhagwati has been a strong votary of free markets, and was a critic of Indian economic policy as far back as 1969. Sen is more statist in comparison. Bhagwati argues that India needs reforms to push growth. Sen believes growth is meaningless without government spending on human capabilities.
In a powerful speech he gave to Indian parliamentarians in 2010, Bhagwati argued that it was a myth that reforms had not helped the poor. He said: “Politicians would do well to strengthen the conventional reforms, which I call Stage 1 reforms, by extending them to the unfinished reform agenda of the early 1990s. In particular, further liberalization of trade in all sectors, substantial freeing up of the retail sector, and virtually all labour market reforms are still pending. Such intensification and broadening of Stage 1 reforms can only add to the good that these reforms do for the poor and the underprivileged… These conventional reforms have also generated revenues which can finally be spent on targeted health and education so as to additionally improve the well-being of the poor: these are what I call Stage 2 reforms which were, let me remind you, in the minds of our earliest planners.”
Now compare this with what Sen wrote in an article published this month in The New York Times, once again warning against an overarching obsession with economic growth: “For years, India’s economic growth rate ranked second among the world’s large economies, after China, which it has consistently trailed by at least one percentage point. The hope that India might overtake China one day in economic growth now seems a distant one. But that comparison is not what should worry Indians most. The far greater gap between India and China is in the provision of essential public services—a failing that depresses living standards and is a persistent drag on growth.”
The Bhagwati-versus-Sen debate bubbles up to the surface every now and then, drawing others into the fray. One prime example is an online debate in 2011—illuminating and entertaining in equal measure—that drew contributions from several top economists, after Sen told the Financial Times, soon after the Bhagwati lecture in defence of reforms, that it was “very stupid” to focus so heavily on growth while India had such high levels of malnutrition.
The online debate soon became a fist fight between the warring camps, with some like Kaushik Basu bravely trying to establish a middle ground.
“I believe that the differences between Sen and Bhagwati are less substantive than what is popularly made out to be. On a variety of important policy matters, they use different languages but say very similar things. My only worry is that even on this Sen and Bhagwati will agree that I am wrong,” Basu wrote.
Economics journalist Martin Wolf was blunt: “Obviously, higher incomes are a necessary condition for better state-funded welfare, better jobs and so forth. This is simply not debatable. Indeed, only in India, do serious intellectuals dream of debating these issues.”
More recently, Sen rather dramatically told journalists that they should confront parliamentarians with data on the number of deaths, one thousand a week, that a delay in passing the food security Bill, which has now been pushed through a presidential ordinance, will cause.
“I often say in jest that serious economists are handicapped in policy debates in India because their opponents feel entitled not only to their arguments but their own facts as well! And here I was facing the same from Sen,” Panagariya told The Economic Times. Bhagwati challenged Sen to a public debate on the issue.
The battle of ideas is not just that. Sen has for long held up the Kerala model as an ideal, while his critics have pointed out that the southern state had relatively better human development indicators even before independence, and its lead has nothing to do with policy since 1947. Bhagwati is more impressed by the Gujarat model based on rapid economic growth, while critics of Modi rarely tire of pointing out how Gujarat lags in human development indicators.
Interestingly, the two rival pairs of economists have new books out presenting their solutions for India. In Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries, Bhagwati and Panagariya again present growth as the panacea for all of India’s problems. The book came out a little before An Uncertain Glory: India and its Contradictions, where Sen and Drèze once again prescribe large-scale, state-run social programmes that are adequately monitored as the solution.
The battle of ideas featuring the two great economists in some ways captures a deeper question facing Indian political leaders: should India aim for growth that will lift incomes or should it first address social issues such as inequality and malnutrition that will eventually hinder growth?
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First Published: Wed, Jul 10 2013. 07 24 AM IST
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