'We Are Lucky To Have Modi'

'We don't have to go abroad for anything.'
'Anyone who thinks we have a lot to learn from the US needs to have his head examined.'
'We are in a new era.'

Renowned economist Jagdish Bhagwati (90) is busy writing his memoir and is set to retire this academic year after a 65 year-long career in research and academia.

In an exclusive interview with Ruchika Chitravanshi and Asit Ranjan Mishra/Business Standard on the sidelines of the Kautilya Economic Conclave in New Delhi, Professor Bhagwati spoke on a wide range of issues, including trade protectionism, India's ambition to become a developed country, the middle-income trap, and the demographic dividend.

How do you see the first two terms of Prime Minister Narendra Modi's government? Were they up to your expectations?

Of course. You need an Opposition for a functioning democracy, but I fear we don't have one.

Without it, even a prime minister can develop an ego and make mistakes.

The positive aspect is that he didn't secure a full majority, and within his coalition, he already has some Opposition.

As you said, the prime minister is leading a coalition government for the first time. How big a drag can that be on policymaking?

I don't think so; many members share the same vision. For instance, Andhra Pradesh Chief Minister Chandrababu Naidu is unlikely to act like the Opposition.

Modi's initiatives, like building toilets for women, have broad support. He prioritises women's issues and continually seeks to improve.

The women in his Cabinet, including the finance minister, are impressive figures who have risen without dynastic connections.

This is big, especially since women make up half of India's population. The prime minister understands their needs, marking a historic shift for women's empowerment.

We're fortunate to have him, as he maintains a form of quasi-Opposition within his coalition.

I am suggesting that the coalition should be looked upon as something good.

Proper Opposition can only emerge from within, given that the Congress party isn't providing it.

There is growing protectionism in the world, and the World Trade Organization is almost dysfunctional. Do you think this is a transitory phase?

I think it is a passing phase. The world is always moving in different directions, which we can't control.

However, many recognise that we would do better with a more open economy.

Professor (Arvind) Panagariya and I knew the efficacy of our industrialisation was lacking, but that has been accepted.

Despite political issues, the country as a whole understands this.

You have always said growth will lead to development. In the post-pandemic world, what do you think about approaches like the Kerala model, which emphasises development leading to growth?

The basic argument is that India cannot redistribute income effectively. The long-term solution is rapid growth through gainful employment.

Redistributing income would be detrimental. While we support redistribution, it must follow growth.

The prime minister understands this, and what's remarkable today is the rapid growth that has occurred.

What are the focus areas for India to become a developed country by 2047?

The notion that you can pick and choose areas where you can grow is a fallacy. By now, we have enough skilled manpower and people willing to invest.

We don't need specific targets. We just provide general incentives and then let things work out. It is time for us to shift to that way of thinking.

We don't need the government to tell us what to do. We've moved to another stage. Which country has these kinds of entrepreneurs? Not even the US.

We've reached a higher plateau, which means we should not think in terms of the government telling us where to invest. It's like rolling the dice.

Do you mean to say that India is now destined to be a developed country and that our growth is on autopilot?

It's on autopilot. It's a great country with a lot of research and young people. There are lots of opportunities now.

We don't have to go abroad for anything. Anyone who thinks we have a lot to learn from the US needs to have his head examined. We are in a new era.

While you are saying that we are destined to be a developed country, there is another argument put forward that India may get trapped in the middle income category.

These are statistical artefacts. They believe this rubbish. What is the point of doing it? That's a speciality of the World Bank, International Monetary Fund-type thinking.

We just need policies to promote growth and local entrepreneurship.

What do you think India should do to make the best of our demographic dividend?

Rapid growth will enable us to absorb these resources and create jobs. One thing I was happy to see the finance minister talk about is the role of quality education.

We haven't had that, and even our IITs and IIMs are not highly ranked.

That should be the next step. We should identify our people, send them to specific places, and get them back.

Like Dr Manmohan Singh -- his father was poor, and he came on his vice chancellor's programme. We all knew he would be something dramatic, but not a prime minister.

Do you think that the protectionist measures India has put in place in the past decade are somehow justified because of the growing protectionism in the West?

No. As my teacher, Joan Robinson used to say, "If you cut off your nose, I won't cut off mine to match yours".

Your policy is independent of what others are doing. If they want to do foolish things, that's their problem.

Of course, it restricts trade, but they will learn it's a foolish policy.

Can we be for free trade when everybody else is not? But why join them? If you're the only open one, you'll gain from that.

We have discussed whether you can have unilateral free trade. I have a Big Fat Book arguing for it, with reason. All propositions should be taken with moderation.

You and Professor Amartya Sen have had public disagreements. Have you, over the past few years, been able to bridge the gap?

I knew this was coming (laughs). Big economists like us will have disagreements.

Economists, like other professionals, have rivalries and disagreements. Inevitably, we will not agree on everything.

Feature Presentation: Aslam Hunani/Rediff.com