Debidatta Aurobinda Mahapatra
As India’s general elections will take place in less than a year to elect a new government in New Delhi, political parties with support from noted economists have ratcheted up rival visions of development. Though this trend could be visible in all general elections, the forthcoming election has witnessed an unprecedented uptick of participation by noted economists.
Intense debates about India’s growth are not something new as such debates have taken place since independence. While India’s first Prime Minister, Jawaharlal Nehru called industries as ‘temples of modern India,’ his political mentor Mahatma Gandhi was against industrialization and believed in village swaraj (self-rule). Post-independence India had witnessed the influence of Gandhi’s ideas. Nehru followed a middle path, called ‘mixed economy,’ under which heavy industries remained under state control, while small scale industries were left to private initiatives. The impact of Soviet five-year plans was evident on Indian economic strategy in those years. The preamble to India’s constitution also proclaimed India to be a ‘socialist’ country. Nehru’s thinking led to the establishment of many heavy industries and particularly under the second five-year plan, also called the Mohalanobis model, many heavy industries were established in different parts of India.
This mixed economy model was largely pursued till the late 1980s. Both India and China followed socialist models of growth. China’s opening of its economy for private sector and foreign investment in late 1970s under Deng Xiaoping led it to grow at a faster rate, while India’s economic growth tottered at a lower single digit level with slogans such as ‘garibi hatao’ (eliminate poverty) occupying center stage in policy making.
It was only in the early 1990s when India underwent an acute financial crisis that it opened its economy. It was under the stewardship of then Finance Minister, currently Prime Minister, Manmohan Singh that India invited foreign capital, provided incentives to private sectors, ended quota-permit raj, and as a result in a span of one decade India’s growth story was not only India’s story, but also a story of a rising power with Indian companies like Tata, Reliance, Bharti, etc making names and investments around the world. While in 1991 India’s foreign exchange reserves stood at $1.2 billion, in 2013 the number was more than $280 billion. India’s growth story, however, was blighted by massive corruption, indecisiveness of its leaders and internal problems.
Ahead of the forthcoming elections noted economists have argued about the most appropriate model for the country and hence have deliberately or inadvertently are linked themselves to the ideology of one or the other political party. Amartya Sen, Nobel laureate and professor at Harvard University, argued in his book Development as Freedom that development does not merely imply the building of industries or foreign exchange reserves but also the penetration of fruits of development to all layers of society including the poor and marginalized. He further argued that unless human capabilities are developed, a state cannot attain levels of just and fair growth. His academic rivals Jagdish Bhagwati and Arvind Panagariya, professors at Columbia University, may not disagree with Sen on this point, but they sharply disagree as to how to achieve such a goal.
The debate between the noted economists can be characterized by the dilemma as to which came first, egg or chick? The Bhagwati-Pangariya duo would argue that investment in industries, infrastructure, etc. would propel growth with positive impact on the government’s welfare activities, as growth in these sectors will have its trickle down effect. Sen would argue that without development of capabilities in terms of education, health, and the alleviation of poverty, development will not be just and fair. It will lead to asymmetrical development with the rich becoming richer, and poor becoming poorer. Bhagwati and Panagariya have a different view on this. While Sen termed India’s recent growth story as ‘uncertain,’ as reflected in the title of his recent co-authored book Uncertain Glory, an indirect reference to India’s growth story, the Columbia University professors have taken a positive approach to India’s growth story in their recent book Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries. (see http://articles.economictimes.indiatimes.com/2013-07-18/news/40657164_1_kerala-model-gujarat-model-high-economic-growth)
The intellectual debates are politicized or are being appropriated by political parties. The current debate between these two rival groups is about the efficacy of the ‘Bihar model’ (with which Sen has sympathies) and ‘Gujarat model’ (with which Bhagwati and Panagariya have sympathies). Both Indian states have witnessed growth. But, it is not the question of which model of development that has raised the debate to such a charged atmosphere; rather it is the political implications of these debates and their likely impact on electorates. Bihar the north Indian state is ruled by a regional political party called Janata Dal Untied (JD- U), and led by Nitish Kumar, while Gujarat the west Indian state, ruled by a national party called Bharatiya Janata Party (BJP). The state is led by Narendra Modi. Both JD-U and BJP were allies for the last 17 years till June this year. At present Kumar is a strong critic of Modi and criticizes his secular credentials for the Gujarat riots of 2002 that led to killing of more than a thousand Muslims. Interestingly, Kumar praised Modi’s leadership in 2003 in a speech, within a year of the riots. (see http://articles.timesofindia.indiatimes.com/2013-06-17/india/40027062_1_senior-jd-rajnath-singh-bjp-move)
Times have changed with changing aspirations. Both Kumar and Modi are now aspiring to play pivotal roles in Indian politics beyond their states. While Modi is seen as prime ministerial candidate of the BJP in forthcoming elections, Kumar has kept his political cards close to his chest though his aspirations are not hidden. The current ruling party in India , the Indian National Congress (INC) is an arch-rival of BJP; hence it has welcomed the separation of JD-U from BJP. While the economists have raised fruitful debates about India’s growth, the politicization of these debates have actually tapered much of intellectual stamina of these debates.
Debidatta Aurobinda Mahapatra is a PhD student in the Global Governance and Human Security Program at UMass Boston. He is also a fellow at the Center for Peace, Development and Democracy in the same university.