It has been sometime now since the debate between the two eminent Indian economists about the growth model India should pursue has been going on (Bhagwati argues for growth purely through deregulation whereas Sen has put his weight behind a simultaneous push to education and health). But the larger question remains about the underlying theme of the debate.
Both Jagdish Bhagwati and Amartya Sen are very eminent economist who became famous in the 1970s .Sen is well known for his work in development and public choice where as Bhagwati is famous for his work on trade. Sen has won a noble prize for his work in development economics and Bhagwati is a well renowned economics professor at Columbia University famous for his trade theories (Paul Krugmen is one of his protege).
Although the argument between them is nothing new. Bhagwati has always attacked Sen and his economic theories but Sen has avoided attacking Bhagwati personally.But this time when ECONOMIST did the review of his book "India: An Uncertain Future " (Bhagwati whereas has praised Gujrat Growth model in his new book); Sen hit back with a letter to Economist stating his point of view about growth .
Also recently, Sen has praised Bihar's inclusive growth model and maintained that Narendra Modi should not become the PM. The media rumor wheels have it that Sen is pro Congress and Bhagwati is pro BJP.
So what exactly is this debate about or is there any debate?
Is growth of paramount importance or its just a means to achieve the larger goal of human development ? Should state be more involved in health care, education, nutrition, housing and other benefits? The answer of these questions is the topic of the debate.
According to Sen growth is important but not as end result but as the means of better education ,better health care for the citizens of the country. Sen in his book has compared India with other poor countries(Sri Lanka, Bangladesh...) who are better than India in many human development indicator such as life expectancy at birth ,infant mortality, access to improved sanitation,female literacy rate etc . This is despite the fact that India has better income per capita than those poor countries. Sen prescribes that India should invest more in health and education even if the wealth generation i.e GDP growth is low. Sen argues that the type of GDP growth that India has pursued, has not led to improvement in health and education because of the quality of growth is not broad based.His theories have of late resonated with government evident from enactment of MNREGA and FSB. He gives example of Kerela in health care where all the figures of human development indicator are better than the rest of the country as the state has actively taken part in the healthcare sector and education.According to Sen, India should give importance to development of its people and not just headline growth rate.If the people are healthy and more educated, they will further contribute to GDP.
Bhagwati on other hand believes that growth is of paramount importance. According to him a country should have a healthy GDP growth which would generate enough funds which can further be redistributed. India should remove trade barriers and a rising tide would lift all boats. He also professes that govt should remove trade barriers and get back on track its reform agenda.He has undertaken many studies which confirm that with increase in growth, there is decrease in poverty.According to Bhagwati, growth makes redistribution possible; not the other way round. He maintains that ever since the reforms of 1991, there has been substantial decrease in the poverty in the country. He doesn't support of state playing a larger role in country's economics. Bhagwati believes that govt should remove the regressive subsidies and instead use direct cash transfer. He is a proponent of Gujarat model of growth .
So who is right and who is wrong?
Neither. They both are complementary rather. But Bhagwati is more correct when he says that growth is necessary which will create resources . Investment in health and education can be made with those resources. Since 2003 -04 there has been rapid decrease in poverty as a result of rapid increase in growth rate of GDP.Nobody can deny the importance of dealing with the poverty. But the ways of doing it is equally important. One of the main reason of current macroeconomic slump i.e low growth , high inflation is the fact that govt spending per capita has increase by almost about 75% . The spending has led to more demand but the supply side is still languishing leading to inflation which effects aam aadmi more than anybody else.
We need to get away from regressive subsidies and start targeted cash transfer. We also need these kind of debates on economy in election year and people to take part in these debates. Its high time economic issues became political issues!
Both Jagdish Bhagwati and Amartya Sen are very eminent economist who became famous in the 1970s .Sen is well known for his work in development and public choice where as Bhagwati is famous for his work on trade. Sen has won a noble prize for his work in development economics and Bhagwati is a well renowned economics professor at Columbia University famous for his trade theories (Paul Krugmen is one of his protege).
Although the argument between them is nothing new. Bhagwati has always attacked Sen and his economic theories but Sen has avoided attacking Bhagwati personally.But this time when ECONOMIST did the review of his book "India: An Uncertain Future " (Bhagwati whereas has praised Gujrat Growth model in his new book); Sen hit back with a letter to Economist stating his point of view about growth .
Also recently, Sen has praised Bihar's inclusive growth model and maintained that Narendra Modi should not become the PM. The media rumor wheels have it that Sen is pro Congress and Bhagwati is pro BJP.
So what exactly is this debate about or is there any debate?
Is growth of paramount importance or its just a means to achieve the larger goal of human development ? Should state be more involved in health care, education, nutrition, housing and other benefits? The answer of these questions is the topic of the debate.
According to Sen growth is important but not as end result but as the means of better education ,better health care for the citizens of the country. Sen in his book has compared India with other poor countries(Sri Lanka, Bangladesh...) who are better than India in many human development indicator such as life expectancy at birth ,infant mortality, access to improved sanitation,female literacy rate etc . This is despite the fact that India has better income per capita than those poor countries. Sen prescribes that India should invest more in health and education even if the wealth generation i.e GDP growth is low. Sen argues that the type of GDP growth that India has pursued, has not led to improvement in health and education because of the quality of growth is not broad based.His theories have of late resonated with government evident from enactment of MNREGA and FSB. He gives example of Kerela in health care where all the figures of human development indicator are better than the rest of the country as the state has actively taken part in the healthcare sector and education.According to Sen, India should give importance to development of its people and not just headline growth rate.If the people are healthy and more educated, they will further contribute to GDP.
Bhagwati on other hand believes that growth is of paramount importance. According to him a country should have a healthy GDP growth which would generate enough funds which can further be redistributed. India should remove trade barriers and a rising tide would lift all boats. He also professes that govt should remove trade barriers and get back on track its reform agenda.He has undertaken many studies which confirm that with increase in growth, there is decrease in poverty.According to Bhagwati, growth makes redistribution possible; not the other way round. He maintains that ever since the reforms of 1991, there has been substantial decrease in the poverty in the country. He doesn't support of state playing a larger role in country's economics. Bhagwati believes that govt should remove the regressive subsidies and instead use direct cash transfer. He is a proponent of Gujarat model of growth .
So who is right and who is wrong?
Neither. They both are complementary rather. But Bhagwati is more correct when he says that growth is necessary which will create resources . Investment in health and education can be made with those resources. Since 2003 -04 there has been rapid decrease in poverty as a result of rapid increase in growth rate of GDP.Nobody can deny the importance of dealing with the poverty. But the ways of doing it is equally important. One of the main reason of current macroeconomic slump i.e low growth , high inflation is the fact that govt spending per capita has increase by almost about 75% . The spending has led to more demand but the supply side is still languishing leading to inflation which effects aam aadmi more than anybody else.
We need to get away from regressive subsidies and start targeted cash transfer. We also need these kind of debates on economy in election year and people to take part in these debates. Its high time economic issues became political issues!
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