Is growth the sole basis of prosperity?

The dormant debate on the merits and demerits of different models of development has been revived, at least in India, following the publication of the book with the ponderous title, India’s Tryst with Destiny: Debunking Myths that undermine Progress and Addressing New Challenges jointly authored by Jagdish Bhagwati, university professor of economics, and Arvind Panagariya, professor of Indian economics, both at the Columbia University.

Any critical as well as clinical analysis of India’s experiments with its economy, from the days of the first Prime Minister, Jawaharlal Nehru, is always welcome, and especially so when it comes from two intellectuals of such high credentials.

I have not read the book, but the pithy and pointed justification of the various propositions advanced by them, as contained in the book summary and their media interviews, is, I find, sufficient to base an initial response on. It may at least provide an occasion to revisit many of the milestones of India’s long and still continuing journey towards durable and sustainable development and the salient factors governing the country’s economic reforms process.

The book essentially seems to centre around the thesis that “intensification of reforms — that allows sustained rapid growth — is the only way to lift millions out of poverty, illiteracy and ill-health and that only growth can provide sufficient revenues for the provision of education and good health for the masses.” It also seeks to draw a distinction between “a primarily redistribution and state driven development” such as what had been adopted in Kerala and “a primarily growth and private-entrepreneurship driven development” supposedly obtaining in Gujarat.

CARDINAL QUESTION

Both have features to commend them. The Kerala pattern has placed the State near the top in social indicators, while Gujarat has succeeded in promoting entrepreneurship on an impressive scale, and gone in for investment, production and access on a broad front.

The cardinal question for which no clear answer has so far been found is whether going the whole hog for growth will in itself and, on its own, result in reduction in poverty, higher nutrition levels, lower infant mortality rates, improvement in public health, greater spread of education and creation of more opportunities for livelihood. More specifically, the categorical claim that intensification of reforms will necessarily “allow” sustained rapid growth seems premature.

At one time, there was a lot of tom-toming of the “trickle-down” effects of growth per se .

The assumption was plumping for economic growth with no holds barred will eventually bring about distribution of the benefits of that growth to all sections and levels of society. But there was an unbridgeable cleavage of opinion on the extent to which the growth would be sustainable in the long run, and would conduce to the enhancement of the quality of life, and on ways to make sure that the distribution of fruits of growth conformed to norms of both intra- and inter-generational equity.

“ANTI-GROWTH ASSERTIONS”

From all that could be inferred, both Prof Bhagwati and Prof Panagariya are inclined to give the “trickle-down” hypothesis the benefit of doubt, if not downright endorsement. Only, they want to replace it with a “more radical phrase — pull-up”, meaning presumably, that a jacking up of the standards of life of the various sections of the society will be a natural and predictable concomitant of growth, for its own sake.

This view of the role of growth leads them to condemn as “myths” the contentions of some economists “that poverty, illiteracy and ill-health afflict India because its leadership ignored them in favour of growth for its own sake; that the economic reforms that focused on growth have failed to help the poor, especially the socially disadvantaged; that any gains claimed in poverty alleviation derive from the use of progressively lower poverty lines; and that even if gains have been made, with one in two children suffering from malnutrition, reforms have done precious little to improve health outcomes.”

They even go one step further, according to the circulated book summary: They say that critics use these “myths” as “weapons to wound and maim the reforms”.

They seem to be particularly peeved at the “anti-growth assertions” of the Nobel Laureate, Professor Amartya Sen, who has always insistently pleaded for the social welfare and entitlements approach to growth.

All I can say is: Whatever the field, dogmas have no place and are strictly to be eschewed.

eom/blvan

Keywords: Growth and development

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