What has not improved, however, is reflective of the things going wrong with the country at large. Amartya Sen and Jean Dreze, in their new book titled “An Uncertain Glory” warn of the dangers of a country that fails to differentiate between “growth” and “development”, a country that mourns for a “low” GDP growth rate of 5%, while shuddering in horror at the prospect of giving free food to its poor, a program that is estimated to cost 23,000 crore rupees annually, several times less than the revenue lost in subsidized gold and oil imports. The authors lay forward a simple argument in their book—India must not continue to ignore its poor, and in doing so, pose important questions for a country that is currently voting for its leader in one of the largest democratic exercises in the world.
While Sen and Dreze caution against ignoring the underbelly of the country, another famous Indian commentator, Gurcharan Das, in his book “India Grows at Night”, criticizes the populism of Congress’s policies that he claims have focused too much on the poor while ignoring the aspirations of India’s burgeoning middle class. India’s political narrative, he says, is now divided into those who focus on the India that is “whining” –and in this he includes the Congress – and the India that is “aspiring” like Nitish Kumar and Narendra Modi. Das argues that the way forward for the country is to “build expectations” to aspire confidence in its middle class so that it can achieve its desires and build the nation. Like Sen, he stresses upon India’s need to reform its institutions and deepen its democratic outreach to ensure that liberty in the country is coupled with dignity, an essential of human life that Sen argues cannot be achieved without the state’s direct involvement in the enrichment of the lives of the poor.
The views of yet another Indian economist, Jagdish Bhagwati, stand in contention to those of Sen and Dreze. In a recent public brawl, Bhagwati argued that Sen was fundamentally wrong in hoping for redistribution to precede growth. Bhagwati argues that Sen is unduly distressed about India’s poor social indicators and that his support for redistribution schemes like the National Rural Employment Guarantee Act and the Food Safety Bill are dangerous because they push a poor country into living beyond its means, pushing the country’s deficit and increasing inflation, a phenomenon that hurts the poor directly. India’s focus, he claims, should instead be on growth rather than redistribution since growth itself will permeate to the bottom and help poor choose and build a better life for themselves.
As a student of economics at Harvard with a deeply vested interest in India, these debates have been a spectacular lesson in how a single question can be answered in so many different ways. As India’s biggest intellectual powerhouses have gone to war on their convictions in how the country must grow, they have given students like me an immensely rich insight into the different challenges that a growing economy faces.
The answers, I believe, do not reside with any single view, as they must not for a country that is as large and diverse as India. All the three intellectuals whose ideas I have presented above agree on the basic and immediate necessities of the country—today, India categorically needs huge institutional reforms that go beyond creating new ombudsmen to check the actions of the current system. They all agree that policy paralysis in the past few years has hurt the country in the extreme and that any economic growth in the future will be conditioned on strong regulations, a quick and active judiciary system, an independent media, and the elimination of crony capitalism that arises out of state’s over-involvement in and misuse of important office.
Besides that, however, I agree with Sen and Dreze on how the country must invest its resources to maximize its long-term aim of deepening democracy and extending dignity to its people. I do not mention the question of increasing growth because, to me, the aim of increasing growth is a proxy for larger questions of improving people’s lives and increasing their access to life’s essentials. I disagree, however, with how Sen’s work has been oversimplified to a socialist, growth-detesting denominator.
In their book, Sen and Dreze present alarming statistics of India’s poverty that reflect the extreme stagnation of the country’s poorest in the time that the rich have become richer. I am not against inequality—I do not believe that economic growth is a zero-sum game, and like every economist, I would rather have everyone grow than put restrictions on the growth of a few in the hopes of reducing inequality. What is truly dangerous, however, is the inability of India’s poorest to participate in India’s growth process. Sen and Dreze argue that this in some part is because of the poor’s dismal health and education indicators that hold them back from accessing economic growth. The authors further argue that there truly is only one way to overcome this initial handicap and that is the government’s involvement in “distributing” its resources so it can ensure basic education and health outcomes to the poor. They are correct, in my opinion, that the free market cannot be expected to find a solution to this problem because of both its immense intractability and its acute time sensitivity. In support, they give an example of how Brazil’s investment in basic education and health plans has significantly improved its education and health indicators.
Bhagwati argues that any involvement of the state will cause inefficiency, and while this is obviously true to anyone who has tried to get any government work done in India, I am afraid the answer to that is not to eliminate government’s involvement but to think of ways of improving it, which is exactly what all the three economists agree on. Having said that, I agree with Bhagwati’s apprehension of a blind approval of welfare programs in the hopes of helping the poor—while Sen and Dreze support both people and place targeting social welfare programs, like the Food Security Bill and the NREGA, I am more supporting of the former over the latter. Edward Glaeser in his paper “Social Capital and Urban Growth” (Glaeser 2008) demonstrates that people focused welfare programs work better in improving social capital versus place-focused programs. This means that I am apprehensive about the government promising employment to its people–I would rather see the government investing its resources in encouraging and developing a manufacturing sector over artificially creating jobs. In contrast, investing resources in providing free food and clean water will ensure that the poor are able to access these jobs in the most efficient manner. The conclusion then, I believe, is to be discriminating and judicious in increasing welfare.
My support for Sen and Dreze over Bhagwati does not mean that I am in any way less concerned about the country achieving its growth and output potential. Das is correct, in my opinion, in expressing the need to create an economy that allows the country’s young to aspire and dream freely. Bhagwati is also correct in being worried for where the money to finance welfare will come from. India is, after all, a very poor nation. Yet, Sen’s support for welfare in no measure undermines his concern for such questions. He argues in his book that the government needs to be retrospective in exactly where it must save and spend its money and that the rich lobbyists of the country make it waste revenue on needless import and oil subsidies whereas this lost revenue could be used to finance welfare. The answer really is not binary. He does not prescribe the government to overlook economic growth in favor of redistribution—he states that inclusive growth has larger externalities that will prove more beneficial to the country in the longer term.
Favoring welfare-oriented growth does not undermine the desire for growth.
Personal preference of which side to be on this debate does then boil down to whether one thinks the poor can help themselves or if they should be helped. While it sounds elitist to say that the poor need to be helped, we should be aware of reducing “help” to “charity”. Welfare programs are not charity, and they also do not undermine the freewill of the poor by “giving them” basic necessities of life. Welfare is a question of leveling the playing field and of believing that every human, no matter where and to whom he or she is born, must have the basic necessities of life that enable him or her to access the country’s growth like everyone else. I am wary of the new reductionist trend of claiming any welfare program is “socialist” and will harm the country—if undertaken properly and with due reverence to economic insight, as Sen and Dreze undoubtedly do, welfare can help improve the lives of the hundreds of millions that will continue to languish at the bottom. Believing that welfare programs can be undertaken without hampering the free-market or economic growth in any way is believing that India can do better.
Reducing the Sen-Bhagwati debate to a Gandhi-Modi debate shames the intellectual prowess of two of the most important economists of the world. As the country progresses into a brighter economic future, we must not just count our bridges and roads, but also the number of children who die of lack of food, all the while remembering that there is no tradeoff between the two. The most important task then is to ensure that we can achieve both and the Sen-Bhagwati argument is a phenomenal insight into the number of ways in which we can do so.