Photo: Jithendra M./Mint
Photo: Jithendra M./Mint

Farm loan waiver is not as silly a policy as you might think: Amartya Sen

Loan waiver is not a completely wrong thing. It has an incentive problem, but many equality policies have incentive problem, says Amartya Sen.

Bengaluru: Amartya Sen looms large over our economic and political discourse. A Nobel laureate and Bharat Ratna awardee, the eminent economist and philosopher was in Bengaluru over the weekend to join other jury members of the Infosys Science Foundation that, each year, honours outstanding contemporary researchers and scientists (Sen is the jury chair for Humanities). Feisty as ever, Sen answered a range of questions that Mint threw at him, with his unique combination of wit, intellect and empathy laced with philosophical humanism.

Edited excerpts:

Professor, the China-India comparison goes on all the time. But there are two areas, education and health, where it almost seems like there is no contest between the two countries. Could you put that in context for us?

The Chinese had an interest in making sure its economic growth works through expanding human ability, through being more educated and healthy. It is old wisdom; you will find that Adam Smith quite extensively discussed both in Wealth of the Nations and in The Theory of Moral Sentiments. There’s an intellectual connection there. Smith was the biggest influence on Marx, and Marx was a big influence on Mao Tse Tung. Mao’s methods and authoritarianism is something which made people critical of him in China eventually, but the fact is that his focus on creating economic growth potential through advancing human capability remains. There are poor people in China. But you don’t have the kind of difficulty that you have in India where a poor person doesn’t have a school to go to, doesn’t have a hospital where he can take his child to, which will provide basic diagnostic and healthcare. That’s a gigantic thing and I’m afraid we are not going to meet this bar in any way at all. The main thing is India has never tried to develop on a solid footing either primary healthcare or primary education. In the absence of that, you cannot make anything else stand.

Is that a failing of our early planning process?

Yes. But it is ultimately a failure of our political process. At the time of Indian independence, these were concerns that came from different political sides, and Jawaharlal Nehru certainly cared for the fact that we need basic education and basic healthcare above all else. Minoo Masani in his book ,Our India, explained the difference between India’s failure and success rested on things connected to education and healthcare. There was a kind of consensus. But by the time India became independent, the political divisions went in different directions. The whole idea that this could be done privately is ridiculous. No country has succeeded in doing it. The basic Adam Smithian understanding is that, ultimately, economic expansion is dependent on the quality of human ability. And education, healthcare and social security are central to that. Why Indians have been so negligent on that, I don’t know. That’s not the old tradition. When Jamshedji Tata arrived in what we later called Jamshedpur, he looked around and said: I’m going to put my steel plant here, what do I need? I need schools for everyone, hospitals for everyone, not just the workers of the steel factory, everyone who will be living here. So, here’s a private entrepreneur who right from the beginning understood what the challenge was.

If it cared to listen, what would you tell this government to do in terms of both healthcare and education?

That premise is so unlikely to happen! Before the government, it is also the media which has to recognize that this is a problem. When Jean Drèze and I were doing our book, The Uncertain Glory, we were just amazed to see how little attention bad health and bad education policies get in the media. And, so, it is to some extent the government’s neglect, but it is also what the public is interested in. If the public takes no interest in healthcare, you won’t get healthcare.

What are your thoughts on farm distress? We have seen the Bharatiya Janata Party (BJP) losing elections on this issue; yet, we don’t seem to be able to find a solution to it.

Farm distress is among many problems, something that we have discussed from 1920s onwards. I don’t take the view of some, saying that the loan waiver is a completely wrong thing. It has an incentive problem certainly, but many equality policies do have an incentive problem. Progressive taxation has an incentive problem. To say that we won’t do progressive taxation, on grounds that it has an incentive problem would be a huge mistake. Here, the question is how can you deal with the incentive problem given what your objectives are.

I grew up in Shantiniketan, surrounded by tribal villages. Between our house and the rice mill three or four miles away, there was nothing but paddy fields. These were small plots mostly owned by tribals. Now they are full of houses, because they got into debt and sold them. I don’t want to be bourgeois enough to say I object to not being able to see the paddy field. But the big learning, of course, is that the farmers had to sell their land, because they were too much into debt. Loan forgiveness is not as silly a policy as you might think. Those who have got into debt have a set of problems and it may be their fault in some way. You might take the Smithsonian, rather moralizing, view. On the other hand, most of them did nothing to deserve it. They just, given the amount of income they can earn from their little land, couldn’t maintain it.

The fundamental problem is that we have way too many people dependent on agriculture?

That is one problem certainly and that is connected to the fact that our employment generation in the manufacturing sector has been poor. It is even poorer now than it was under the UPA (United Progressive Alliance) government. The previous Congress government doesn’t deserve much credit for thinking clearly on education and healthcare, but they did generate more employment than the present Modi government seems to be doing. In fact, there seems to be an amazing lack of interest.

You have seen many governments come and go. How would you remember this government? Is there a particular thing that strikes you most about this government?

That probably wouldn’t be economics (smiles). It is a government that divided the country. It is a government that led human rights very difficult to pursue. It is a government which has taken an interest in who eats what, and if you eat the wrong thing, then you may not deserve to live. I think it is the divisiveness of the government which would dominate my thinking, because it goes so much against my understanding of India. The neglect of education and healthcare is a mistake, but generating a sense of hostility to part of the population is more than a mistake. It is evil.

Any two or three recommendations for the next government?

There are no two or three things. We have to do many different things together. Whenever someone says what are the two or three things, I say why two why not 200. I’d like people to recognize that the citizen is a citizen is a citizen, and that you cannot convert someone into a second-class citizen. That India is not a communal country, India is for all Indians. And India is a country which has a huge tradition of toleration and plurality and we have every reason to be proud of it. And also, I’d be very interested in science, the role of education and healthcare is part of science. We have to avoid mistakes, as well as we have to avoid evil.

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