BackBhagwati: Manmohan’s legacy at risk
Government’s slow pace of reforms comes under criticism
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Mumbai: Reforms in retail is good for the country and India should implement such measures in the agriculture and health sectors as well, said Jagdish Bhagwati, professor of economics and law at Columbia University, even as he criticized the government’s slow pace of reforms.
“The government does understand that you have to move into the next gear," he said at a media interaction ahead of delivering a lecture on the occasion of Exim Bank’s commencement day.
“The leadership has realized that you have to do something, otherwise the whole system is at risk and his (Prime Minister Manmohan Singh) role in history is at risk," Bhagwati said, adding brand-name politics “is not working any more" as is evident from the defeat of the Congress party at Uttar Pradesh’s Rae Bareli and Amethi seats in the recent assembly elections.
Bhagwati cited examples of electorates backing chief ministers such as Nitish Kumar of Bihar, Narendra Modi of Gujarat and Naveen Patnaik of Orissa for doing good work.
“Things are not dandy any more. You have to work on it," he said. “Reforms process has to work."
However, Bhagwati said he was confident that the government is determined to take the reforms process further and the ministers are getting uncomfortable with elections approaching in 2014.
“You can see in their action, the crazy way they are reacting even to mild criticism... Clearly they are in a state of panic, the whole system is in a state of panic," Bhagwati said.
Later, at his lecture, he said Barack Obama’s re-election as US President is not a good news for India, mainly for Obama’s anti-outsourcing stance and the way the administration undermined the Doha round of talks in World Trade Organisation on multilateralism in trade.
“It is time for our Prime Minister to tell President Obama that, while we can understand that politics means that sometimes people will hit below the belt, now that his re-election is out of the way, we expect more responsible behaviour from President Obama and his trusted associates," Bhagwati said in his lecture.
At the press conference, Bhagwati said India should spend more on agriculture, health and other social sectors to ensure that the economic fruits are enjoyed by everyone. India can afford to spend more on healthcare and education as now the country has revenue to back it up.
“We had discussed on things like cancer in the second and third five-year plans in detail. Problem was implementation because there were no money. Now revenues are increasing. People’s aspirations are rising so we have to address that," he said.
The slowdown in the world economy is temporary, he said, adding that while growing, India should not lose sight on its traditional reforms process—increasing the inclusiveness of the economically backward classes.
“If you can’t achieve that, you really cannot achieve any other reforms," the once Nobel Prize in economics contender said.
Bhagwati said concerns regarding grocery shops losing business to big organised retailers are unfounded.
“Everywhere in the world, the economic return was very significant (after retail sector liberalisation). The mom-and pop shops survived...mainly because they don’t pay taxes, they work overtime, have less overhead cost...big retail companies just cannot compete with these people," said Bhagwati.
If organized retail companies come in, that will benefit the farmers by offering them better prices and cutting down on wastages of food products—a problem area for India.
It is also time that the government opens up the agriculture sector and allows genetically modified crops to come in, he said. “We now have the same fear about agriculture that we had about manufacturing when we started the reforms. I think an agriculture guy will survive. We just assume that peasants can’t compete, they are not smart enough... that is not the case. We need to look at agriculture seriously."
Genetically modified crops, even as likened with ‘Frankenstein’, is eventually good as the yields are more and that assure food security, he said. “If you are not allowing Frankenstein, you are allowing Grim Ripper."
Bhagwati also praised Reserve Bank of India governor D. Subbarao for showing independence.
“Any government in power will attach a little more premium on growth, especially when elections are round the corner. This pressure will continue...but Subbarao is showing his independence. That way he is setting a good example."
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