New Delhi: The public discourse surrounding his new book, An Uncertain Glory, India and its Contradictions, co-authored with Jean Dreze, has rapidly metamorphosed into an either-or growth versus social development debate, but Nobel laureate Amartya Sen argues that both are needed—and not one at the cost of the other. In an interview with Mint he spoke about the key arguments in this book. Edited excerpts:

Would it be a correct summary of your book to say this: the post-1991 discourse has largely been urban-centric and has tilted towards privatization? In part, this rush towards the market was triggered by 50 years of stagnation and a lack of hope among the educated. The book makes the case that growth without improvement in the lives of all will split the country into two very unequal halves.

Now, that is combined also with the power of the businesses which are of two kinds. One, the power to take decisions and the other is the power to influence public discussion. The former is less problematic than the latter. The latter is problematic, because if you are going to use the market economic efficiencies, then the businesses will have a dominating role in determining it. And then if you think that this goes along with an active state, particularly doing the things that Adam Smith says that the state can do well, then there is no tension between quite a lot of work done by businesses but supplemented by the role of the government. But if the public discussion gets strongly influenced by the power of business, that can affect the kind of balance that a democratic society might want. ‘Marketization’ in some areas is not a very good way of running things. Say in the case of healthcare, it will never be. At some level, education could be quite efficient, provided it is not just for profit. But at an elementary level I don’t see the market doing that work.

I had already written as to why the intrusion of the state in many areas was creating inefficiencies, but I also wanted a lot more work done by the state in health and education. In 1991, we got one but not the other, we got reform but we could have gone farther. Manmohan Singh (then finance minister) did politically maximum what he could. He had the strong support of (then prime minister P.V.) Narasimha Rao. But the urgency of dealing with education and health sectors, immunization, hygiene and the judicial system (we have a system which takes 10-15 years to get a judgement)—was not there. That is a not a good way of running things.

It is shocking that Indian social indicators are, in some cases, just above that of sub-Saharan Africa. Are you saying that had the middle class been more concerned about education and health and suchlike, and not just focused on growth, the required pressure may have come to bear on the government to deliver? We have the infrastructure to deliver basic health and education but the pipeline to deliver is badly clogged.

For example, India was thought to have been the main centre of the AIDS epidemic earlier on. But that didn’t happen. Because that fear actually made the middle classes very worried and were very conscious of the issue. So my hope is that if the middle class gets the right information about health and education and other issues, they can get involved and something similar can happen. Remember that administration and accountability are not independent of what we want. I am very strongly pro-reform. I would like more reforms in many ways. Though reforms are needed, they should be combined with health and education.

The failure of the government to carry through the second part of the agenda, namely, reforms in sectors such as education and healthcare, has led to a situation which this book attempts to show with systematic data. Many people are aware of all of this; however, it is in an unsystematic manner. The failure of the second part is sometimes mistakenly identified as failure of the first part. We should not blame liberalization for failure of the second part of the process.

Those who want more liberalization, and I count myself as one of those, immediately treat you as an enemy because you want the other thing. While actually it is the other thing that makes liberalization viable in a democratic society because that makes people’s life better and they can understand that liberalization is compatible with business expansion and the state has to provide these other things. But when the state does not do it, that is when people’s lives go badly and growth potential is badly affected. Nothing is more important to sustain economic growth as a healthy and educated labour force. There is a lot of misguided frustration and attack on reform when what people are really complaining about is not enough positive things. Liberalization is viable only with the additional things the state is able to do.

The Indian mass affluent has used the strategy of exits to solve the problem of a dysfunctional government. We try and replace the state in whatever we can. Could it be, that for lack of faith in the governance mechanism, this voice that runs the debates in the country leans towards the market? Is exit from the government through cash vouchers instead of basic state schooling and insurance, instead of public health, be the strategy of a body of people who have no faith in the political will and intent of the government to do its job?

But the cash transfers aim to allow the poor to substitute state services…

What I don’t like about cash transfers is that it is just re-distribution and I’m against that. If we raise the money, we should use it for those public services that are lacking. Re-distribution is a mistake. What the poor need is better public services and not cash in their pockets. Cash transfer allows them to get certain things— and I’m in favour of it and retaining it, but it is not a solution. This is not the most efficient way of running it. If you are a peasant farmer and have never been to school, your ability to choose on the basis of information is very limited. Given the asymmetry of information, you’ll never be able to get there.

Our attempt to fly in the face of world experience and declare a new territory on the moon is unlikely to work. The rich may be able to opt out. Am I against private service? No. On the other hand, you have to have basic services for everyone. That’s the case in the whole world—Brazil, Mexico, Korea, Japan…everywhere. You say that people have got disgusted with the services, but that’s not the full story. Some states which have tried to do it have succeeded, like Kerala, Tamil Nadu and Himachal Pradesh. It is a costly mistake to say that it hasn’t worked. To say that is to ignore the question, that we ask in the book, why has it worked there? There is need for major institutional reform. Accountability needs to come and it won’t come by wishing for it. The licence raj was a major feeder of corruption. That has gone to some extent and can be made to go ever further.

We need nothing short of a revolution, not an armed revolution, but a revolution in thinking and carrying it out. But if I am not pessimistic it is because we haven’t done the thinking at all. When we have thought through and failed then we can say it does not work.

Your book argues in favour of a greater role of the state through public health, education, nutrition programmes. But given the track record of the government machinery—the state not having delivered for over 60 years—why should it be trusted?

To summarize: I am strongly in favour of markets, of business decisions left to business, but I am very worried about the distribution of knowledge, understanding and news analysis, being strongly influenced by business and its influence on the media. Both the success and the failures need to be discussed. The spoiling of the open dialogue and vilifying anyone who disagrees is one of the unfortunate impacts that the business media may have. Take the Wall Street Journal (WSJ) for example. I don’t read it for the editorials, but it has huge amounts of news. Excellent news coverage needs to be maintained for the sake of efficiency. WSJ disassociates views from the news coverage. When I got the Nobel, the signed edit in WSJ said “The Wrong Man gets the Nobel" but the news pages gave an excellent coverage of my lifetime’s work. I was impressed by the fact that that was their view, but the news coverage was an analysis of the work. That is something which is needed in India.

You have attacked the subsidies that the rich get in India—subsidies on LPG (liquefied petroleum gas), on power, on fertilizer, on diesel— and you find it strange that there is such a debate on a food subsidy. You argue in the book that the fiscal condition becomes important only if the subsidy is for the poor. If there are five subsidies that you could do away with, what would they be?

But do I think it is a good idea? Yes, though it is not an ideal Bill to deal with malnourishment and undernourishment, but in terms of not doing anything, it is better to do this. What I don’t like is that when people talk about fiscal responsibility, they do it while sitting in their AC rooms, powered by subsidized electricity, eating food cooked by subsidized gas and travelling in subsidized diesel cars.

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