New Delhi: Economist and Columbia University professor Jagdish Bhagwati on Tuesday said he is confident the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi will open up the retail sector for foreign direct investment (FDI) during its five-year tenure.

Delivering the Madhav Rao Scindia Memorial Lecture on Tuesday, Bhagwati, who has spoken highly of the Gujarat model of economic development when Modi was chief minister, said he never found Modi opposed to the idea of allowing FDI in retail during his brief interaction.

“The problem with FDI in retail was that BJP (Bharatiya Janata Party) had its traditional support base among the small shopkeepers. Now that Modi has got a wider constituency, he may be able to move. Whatever little conversation I had with him when he was chief minister of Gujarat, I did not find him having any anti-retail liberalization sentiment," he added.

“I can give a bottle of Indian wine, not foreign wine if I lose," Bhagwati quipped on his bet that the retail sector will be opened up.

While the Modi government has not reversed the earlier government’s decision to allow FDI in multi-brand retail, its commerce minister Nirmala Sitharaman has made it clear that the government will not allow any FDI in this sector.

In its manifesto released before the general election, the BJP had said it would allow FDI across sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialized expertise, but not in supermarkets. “The BJP is committed to protecting the interest of small and medium retailers, SMEs (small and medium enterprises) and those employed by them," it had added.

Bhagwati said politics cannot proceed in a straight line. “You have to negotiate mindspace in politics. What I look for as an observer of change is that things are moving in the right direction. I should not have the luxury of saying that ignore all the problems," he added.

Praising former prime minister Manmohan Singh, who was in the audience, for carrying out the first-generation economic reforms, Bhagwati said the reforms carried out since 1991 were gradual and top-down, while Modi can carry out faster second-generation economic reforms because of his massive mandate.

Commenting on the now legendary intellectual fight between him and his college friend and Nobel laureate Amartya Sen on issues of growth versus redistribution, Bhagwati said he does not like the term redistribution and believes that wealth needs to be accumulated through higher growth and spent on sectors like health and education. This is what the Gujarat model is famous for. “One of the problems with professor Sen is that he just assumes that because it is public money, it must be spent through public sector," he added.

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