Friday, July 26, 2013

The capitalist manifesto

Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries. By Jagdish Bhagwati and Arvind Panagariya.PublicAffairs; 290 pages; $28.99 and £19.99. Buy from, The Economist
INDIA needs more market liberalisation to promote economic growth. A few years ago, with its economy expanding at an annual rate of nearly 10%, there was talk of India one day rivalling China, or even overtaking it. But policymakers have grown complacent. They assumed rapid growth would continue, but did nothing to foster it. The result is that India now putters on at less than half what it could achieve. Investors are anxious and the politicians are bickering.
In their new book Jagdish Bhagwati and Arvind Panagariya, both economics professors at Columbia University, outline a series of measures to boost growth. “Why Growth Matters” is a blunt book; almost a manifesto for policymakers and analysts. It explains how rapid expansion has brought India immense gains, and why more change is needed—and needed soon. Both men are champions of globalisation and they hope their ideas will stiffen the resolve of India’s leaders.
What they have to say is convincing. Increasing growth rates over the past couple of decades lifted some 200m Indians out of poverty. That is an immense gain. In 1978, say the authors, more than half of all Indians were below the poverty line; today it is roughly a fifth. Gradually even those politicians who put their trust mostly in redistribution and the early roll-out of welfare grasp that a bigger economy means more resources to share around. Read More

Beyond bootstraps

An Uncertain Glory: India and its Contradictions. By Amartya Sen and Jean Drèze. Allen Lane; 434 pages; £20. To be published in America in August by Princeton University Press; $29.95. Buy from,

From The Economist
AS A conundrum it could hardly be bigger. Six decades of laudably fair elections, a free press, rule of law and much else should have delivered rulers who are responsive to the ruled. India’s development record, however, is worse than poor. It is host to some of the world’s worst failures in health and education. If democracy works there, why are so many Indian lives still so wretched?
Amassive blackout last summer caught global attention, yet 400m Indians had (and still have) no electricity. Sanitation and public hygiene are awful, especially in the north: half of all Indians still defecate in the open, resulting in many deaths from diarrhoea and encephalitis. Polio may be gone, but immunisation rates for most diseases are lower than in sub-Saharan Africa. Twice as many Indian children (43%) as African ones go hungry.
Many adults, especially women, are also undernourished, even as obesity and diabetes spread among wealthier Indians. Despite gains, extreme poverty is rife and death in childbirth all too common. Prejudice kills on an immense scale: as many as 600,000 fetuses are aborted each year because they are female. Compared even with its poorer neighbours, Bangladesh and Nepal, India’s social record is unusually grim.
“An Uncertain Glory”, an excellent but unsettling new book by two of India’s best-known development economists, Amartya Sen and Jean Drèze, sets out how and why this is so. They argue that Indian rulers have never been properly accountable to the needy majority. Belgian-born Mr Drèze has lived in India since 1979 and became an Indian citizen in 2002. Now at Allahabad University in the north, he is influential among Indian policymakers, particularly for pushing a right-to-information law. Mr Sen, a Nobel laureate, now at Harvard, famously showed how famines have never happened in democracies. The two men want a debate on India’s social failures and how to fix them. Read More

Amartya Sen on Narendra Modi