The India growth story is in trouble because it has a big design defect

We need the middle ground and multiple models. What we have is an angry and wasteful polarity.

August 1, 2013 in Columns
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The keepers of India’s economic vision seem to have contracted a crippling disease: a propensity for polarities. Debates about the country’s economy inevitably fall into two hostile — and futile — tracks. One of these was evident in the very public spat between economists Amartya Sen and Jagdish Bhagwati last week. This may have yielded entertaining heat but little else. Even to an untutored mind, the answers seem obvious. The path to India’s economic health may always be a rocky one but it can never be manichean. If we are ever to reap our “demographic dividend”, clearly we need both growth and social spend; private enterprise and government commitments; industrialisation and agriculture; the formal and the informal sector. And we need all of it to coexist.

Yet, to read the scathing edits this past week would be to imagine the single greatest challenge India faces is to choose one path exclusively over the other. This polarised debate is particularly frustrating because, in the same breath, both sides assert their goal is not different: they want India to maximise growth, yet deliver on social equity. If that is true, the only real disagreement, it seems, is over process.

The Bhagwati school of thought is opposed to the involvement of government in the delivery of public welfare because it is so visibly inefficient. For the most part, they are right. But to depend only on the dubious “trickle down” of growth or give only cash vouchers to India’s poor and leave them to access healthcare, education, food and clean water for themselves, solely from the private sector, is an equal recipe for disaster. Governments are supposed to be bound by a social contract; private enterprise is driven only by the idea of opportunity and profit. What good would money do, for instance, to tribal hamlets stranded in Odisha across a river that has no bridge? Which private entrepreneur would set up a school or health centre in their neighbourhood?

It may have been less entertaining, therefore, but much more illuminating to hear some of India’s most eminent minds debate how to free up private enterprise as much as possible, yet bring more efficiency and quality into the State’s public delivery. Debate how multiple models of delivery can coexist. And debate, most importantly, how a corporate culture of accountability can be brought into government rather than speak of replacing government entirely with corporates.

But instead of that, the week threw up yet more proof of polarity. In an interview in The Indian Express, economist Arvind Panagariya — who is the Bhagwati Professor of Economics at Columbia — was asked to list three people he believed had broken the UPA’s growth momentum. Prompt came the reply: Jairam Ramesh, Jayanthi Natarajan and Sonia Gandhi: shorthand for the facile growth-versus-environment debate.

It’s not just Panagariya. Ramesh, as environment minister, and Natarajan after him, has often been accused of busting the country’s GDP party. But the facts speak otherwise. Ramesh may have stalled the introduction of Bt Brinjal; and blocked a few high-profile projects like POSCO and Vedanta’s in Odisha; the Lavasa Lake City project near Pune; and the nuclear plant in Jaitapur. He also had a high-profile clash with his Cabinet peers over wanting to declare go and no-go areas for coal mining. But in the balance, he only rejected six projects and cleared almost 600 in the short time he was minister. Natarajan has been even more lenient, picking up cudgels only when the prime minister wanted to set up the National Investment Board, which would enable big-ticket projects to pretty much bypass environmental clearances altogether. Other than that, their project clearance rate was no different from their predecessor — the infamous ‘ATM minister’, A Raja. (In fact, green activists ended up calling Ramesh a brown minister.)

So what exactly is the contention? Are Panagariya and his ilk suggesting the great India story came to a grinding halt because a mere six projects in this vast country were put through rigorous scrutiny?

What does that say about the essential design defect in our growth story? Growth can only happen without scrutiny, without regard for social justice, environmental depredation, and the unsustainable overuse of our national resources. Is India’s great 21st century economic idea then nothing more than a primitive idea of slash and burn? And yet we feign surprise when it begins to fall apart?

shoma@tehelka.com

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