Book Review: Which way India? Debate and its lessons

Jagdish Bhagwati and Arvind Panagariya, Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries. New York: Public Affairs, 2014, pp. 280, US$28.99.

Jean Dreze and Amartya Sen, An Uncertain Glory: India and its Contradictions. Princeton: Princeton University Press, 2013, pp. 448, Paperback US$19.95, Hardcover US$29.95.

Joan Robinson, the Cambridge economist, is said to have once quipped that ‘whatever you can rightly say about India, the opposite is also true’. Perhaps nothing so vividly highlights this incongruity than the books by eminent economists: Jagdish Bhagwati and Arvind Panagariya in Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries (2014); and Jean Dreze and Amartya Sen in An Uncertain Glory: India and its Contradictions (2013). As expected from such renowned scholars, their books use an impressive range of statistics and sound economic reasoning to offer a wealth of insights and information on the Indian economy, and eloquently analyse past and current economic policies on growth and development with huge relevance for India. Unfortunately, the books’ substantive messages, including the policy prescriptions, have often been overlooked amidst the acrimonious war of words between the two towering protagonists—the more pugnacious Bhagwati, a distinguished Columbia University professor of economics and a leading candidate for the Nobel Prize, and the more reticence Sen, already the winner of the Nobel Prize in economics and professor of economics and philosophy at Harvard University.

The aim of this review is to retrieve and highlight the substantive messages and salient insights that have been overlooked. As the following pages illustrate, although the two books present, at times, passionately contrasting views on India’s post-independent economic achievements, in particular what explains the successes, the failures, the missed opportunities and what should be done to boost India’s economic growth and alleviate poverty, their ideas also converge on some key issues, and the differences between Sen and Bhagwati are not always as pronounced as it is often made out to be. In fact, contrary to the claims of partisans and detractors on both sides, Bhagwati (and Panagariya) is hardly a cheerleader of business and corporate interests, nor wedded to some orthodox ‘neo-liberalism’, and nor is Sen (and Dreze) representative of some quasi-socialist and pro-government Keynesian economics. More to the point, Sen is not against economic growth and Bhagwati is not against the provision of public assistance and reducing poverty. The works of these eminent scholars are too sophisticated and nuanced to be caricatured in such a crude way. Rather, their disagreements and debates are old and enduring ones in political economy: the proper role of the market and the state in economic development and how best to balance these two forces. Indeed, as the following sections show, the debate often comes down to whether one sees the proverbial glass as half-full or half-empty.