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PRAFUL BIDWAI COLUMN

Not by growth alone

PRAFUL BIDWAI
JAGDISH Natwarlal Bhagwati, Professor of Economics at Columbia University in New York, isn't self-effacing or modest. In 2004, he got a chair created in Indian political economy at Columbia, named after himself. Its occupant is Arvind Panagaria, Bhagwati's co-author!
In 2010, Bhagwati had a fellowship named after himself established at Columbia Law School to coincide with the creation of a chair named after alumnus and India's main Constitution-drafter, Ambedkar. The fellowship is financed by the Indian taxpayer!
Bhagwati and Panagaria are dyed-in-the-wool neoliberals and apologists for now-discredited liberalisation, privatisation and globalisation policies. Bhagwati has championed free (as opposed to fair) trade as key to development. Panagaria has been Asian Development Bank's chief economist.
Both root for "second-generation reforms" and oppose food security, employment guarantee and other welfare measures.
Bhagwati ridicules those who disagree with him, in particular Nobel Laureate Amartya Sen. Bhagwati's books, including the latest “Why Growth Matters" (with Panagaria), are replete with vicious comments on Sen.
For years Bhagwati would throw a party each time Sen missed the Nobel Prize. He called for a second "Swadeshi" movement - a bonfire of India's regulations - without the faintest irony of advocating this from abroad!
Yet, many were shocked when Bhagwati stooped to launching abusive personal attacks while commenting on Jean Dreze and Sen's new book “An Uncertain Glory: India and Its Contradictions". Sen responded soberly, largely without mentioning Bhagwati.
What seems to have "provoked" Bhagwati is Sen's defence of food security, his endorsement of Bihar's social welfare measures, and his opposition to Mr. Narendra Modi as prime minister.
Many described this exchange as a shouting match or slugfest. But the aggression comes from one side, with Bhagwati unfairly accusing Sen of being anti-growth.
The exchange highlights the polar opposition between the GDPists, or worshippers of GDP growth as an end-in-itself, and those who emphasise social progress and welfare, which requires more than growth.
The GDPists' critics are vindicated by India's experience over the last two decades, the fastest-growth period in recent history. This has seen very little improvement in the living standards of the majority, or in reduction of poverty, income inequalities and regional disparities - the real measures of progress.
Progress requires balanced growth with equitable distribution. India's growth is severely unbalanced: with services expanding rapidly, industry growing too sluggishly to absorb labour, and agriculture - on which 60% of people depend - growing at two percent.
India's recent growth has wrought enormous environmental destruction. The World Bank estimates that environmental degradation annually costs India a horrific 5.7% of GDP. This shaves off almost all of the annual 6% per capita GDP growth recorded between 2000-01 and 2010-11!
Income disparities in India are growing obscenely. According to the latest National Sample Survey, per capitaspending of the richest 5% of urban Indians in 2011-12 was 15 times higher than that of the poorest 5%. Twelve years ago, the ratio was 12. In rural India, the top-bottom disparity grew from 7 to 9 multiples.
Even going by official poverty estimates - which very few buy - the annual pace of poverty reduction is just 2.2%, a fraction of the 7.6% GDP growth. There's no "trickle-down." Rather, growth enriches the already affluent.
Bhagwati-Panagaria have no answer as to how this growth process, into which imbalances and disparities are built, can reduce them by itself. Their book contains no serious analysis. It merely regurgitates shop-worn cliches.
Bhagwati-Panagaria abuse Sen as a misguided "Mother Teresa of economics," whose prescriptions have done "huge damage." They rail against food subsidies for the poor, which are under Rs.l lakh crores, as a “fiscal threat" and waste, but are silent on the much larger fuel subsidies or the annual Rs.5-lakh-crores budget giveaways to the rich.
Dreze and Sen lay out a persuasive case for state intervention in their sober (and sobering) discussion of India's dismal performance in healthcare, literacy, education, poverty reduction, social assistance, etc. They aim at "integrating growth with development" within a democratic and participatory framework.
They highlight India's persistent social pathologies. Thus, 43% of India's under-five children remain undernourished, and 48% stunted. Almost half the women of childbearing age are anaemic.
These ratios have remained unchanged over two decades. As has the proportion of Indians who defecate in the open -still over 50%.
India, despite high growth, remains a social development laggard in South Asia barring Pakistan. The contrast with Bangladesh is revealing. Bangladesh's per capita income is half that of India's. But it has overtaken India in life expectancy (four years higher), infant-mortality decrease (25% lower), and child immunisation (82 vs 44%).
India performs disgracefully even in comparison to the world's poorest 16 countries outside sub-Saharan Africa. It ranks as low as 11 (literacy), 13 (improved sanitation) and 15 (underweight children). India is a disaster zone - little islands like California amidst a sea of social deprivation, economic bondage and human misery.
In Asia's lower-middle income countries, to which India belongs, spending on social insurance, social assistance, and labour market programmes averages 3.4% of GDP. India's spending is one-half of this. Even that low level is reached largely because of the National Rural Employment Guarantee Act.
Dreze and Sen powerfully argue for corrective measures to empower the poor and enhance their capabilities. They address not just economics, but issues such as corruption, accountability, ethics, public reasoning about equality justice, and opportunities made available by India's relatively robust democracy despite its faults.
One wishes Dreze and Sen had delved deeper into the root-causes of India's social development failures - class, caste and gender biases, themselves embedded in India's severely unequal society, its policymakers' elitism, its rulers' misanthropic nature, recent distortions in public discourse, and increasing demonisation and repression of popular protests.
Dreze and Sen's passion for justice is expressed in the book's final chapter, “The Need for Impatience." This exhorts us to become intolerant of our policymakers' criminal indifference to justice and equality, and mobilise energies on these issues.
The writer Is an eminent Indian columnist. E-mail: bidwal@bol.net.ln