The Fight Over India’s Future

My article in the Wall Street Journal on the feud between Amartya Sen and Jagdish Bhagwati–and what it signifies for India’s economic development.

Go for growth or social change? A feud between economists boils over

Indian politics isn’t generally known for its intellectual bent, so it was a curious sight last week when two Ivy League professors were thrust into the political limelight here. Harvard’s Amartya Sen and Columbia’s Jagdish Bhagwati are two of India’s most eminent economists. Mr. Sen is a Nobel laureate and former master of Trinity College, Cambridge; Mr. Bhagwati is a much-decorated scholar of international trade. Both are highly respected, both have recently published books on Indian development—and both have been engaged in a long-simmering feud.

The origins of the feud are unclear. Messrs. Sen and Bhagwati attended Cambridge together in the 1950s; they later taught at the same university in New Delhi. Rumors of bad blood have circulated for years, and their work has placed them in very different ideological camps. Mr. Bhagwati is known as an advocate for free trade and market liberalization as a means of achieving rapid growth. Mr. Sen has spoken out against what he calls “market fundamentalism”; his approach to development argues that economic growth must be accompanied by attention to social “capabilities” like health, education and gender rights.

Mr. Bhagwati’s disdain for Mr. Sen’s views is evident in his latest book, “Why Growth Matters,” written with Arvind Panagariya. Last month, their differences spilled onto the letters page of the Economist, when Messrs. Bhagwati and Panagariya, responding to a review of Mr. Sen’s new book, “India: An Uncertain Glory” (written with Jean Dreze), accused Mr. Sen of paying only “lip service” to economic growth and instead championing what they called “redistribution.” Mr. Sen responded in the next issue, complaining about an “outrageous distortion” and arguing that he has always supported growth, while adding that investments in social indicators are essential to fostering growth.

These differences have until now seemed relatively obscure, the stuff of academic gossip and professional score-settling. But in recent weeks they have acquired a new significance. On July 22, Mr. Sen was asked by an Indian television reporter how he felt about the prime ministerial prospects of Narendra Modi, the presumed standard-bearer of India’s main opposition party, the Bharatiya Janata Party (BJP), in the next election.

Mr. Modi is a polarizing figure: He chills the hearts of Indian liberals, who cannot forget the anti-Muslim killings that took place under his watch in the state of Gujarat, but he equally warms the hearts of many Indian businesspeople, who see in his relatively efficient administration possible succor for the moribund national economy. Mr. Bhagwati has expressed admiration for the high growth rates achieved under Mr. Modi in Gujarat; Mr. Sen has expressed skepticism about the so-called “Gujarat model,” arguing that it hasn’t translated into adequate social progress.

When Mr. Sen replied during his interview that he would not want to see Mr. Modi as prime minister, it inevitably recast their intellectual differences in the mold of political combat. A media frenzy ensued; politicians across the spectrum jumped into the fray. Mr. Bhagwati, thrust into the role of a right-wing BJP supporter, was grilled on TV and in newspaper interviews about his voting intentions. Mr. Sen found himself in the part of a cheerleader for the ruling Congress party and its welfarist policies.

The equation is, of course, simplistic. Neither Mr. Sen nor Mr. Bhagwati is so easily pinned down; nor, for that matter, have India’s top political parties been ideologically consistent on economic policy. Much of the noise is simply an indication of rising political temperatures: Elections are due in early 2014, and the battle lines are already being drawn. But the controversy and accompanying media circus are an indication, too, of something more serious. They point to a growing debate within India about the state of its economy and the direction the nation should be taking.

It is true, as some of the more informed commentary has pointed out, that Messrs. Sen’s and Bhagwati’s positions are not, actually, so very far apart. In a telephone conversation, Mr. Sen (with whom I studied in college) reiterated that he has never been antigrowth. Mr. Bhagwati, for his part, told me that he strongly favors investments in health and education, but that he sees economic growth as essential to generating the funds for such investments.

To the extent that there is a disagreement between them, it concerns emphasis, or perhaps sequencing. Mr. Sen draws on the example of the Southeast Asian tigers to argue that a healthy and educated population serves as a foundation for economic growth. Mr. Bhagwati, in his book, writes of the importance of first implementing “Track I reforms,” aimed primarily at generating growth, and then “Track II reforms,” which would use the revenues created by the first phase to invest in social programs.

These distinctions are subtle, but they are meaningful in the current Indian context. India is at something of a crossroads—searching for a way out of poverty, casting about for a model of development that will combine greater economic prosperity with progress on the social front.

This discussion comes on the heels of two momentous decades, beginning with the “big bang” economic reforms of the early ’90s. The results of those reforms have been remarkable, but mixed. In their book, Messrs. Bhagwati and Panagariya point out that market reforms have lifted almost 200 million people from poverty. Messrs. Dreze and Sen acknowledge this progress but also point out that India has lagged in other ways, falling behind even far poorer Bangladesh in areas like life expectancy, infant mortality and girls’ education.

Resolving this conundrum—of undoubted economic progress with stubborn social deprivation—is one of the central challenges confronting India today. For much of the early 2000s, during the heady days of 8% annual growth and seemingly unstoppable economic ascent, the nation put its faith in markets. There was an unstated assumption among policy makers and the public that rapid economic growth could on its own solve India’s social problems.

Now the mood has shifted. Partly because of a sense that economic liberalization has led to crony capitalism and partly because the sheer scale of its problems can no longer be denied, India has grown disenchanted with the claims for market-driven economic growth. In recent years, the Congress-led government has initiated several projects (including a massive public-works program and a controversial food-subsidy bill defended by Mr. Sen) that advocates praise as socially progressive but that critics deride as budget-busting.

In truth, as Messrs. Sen and Bhagwati would surely agree, India needs both economic growth and social progress. That is hardly a controversial proposition, but Messrs. Sen and Bhagwati present very different road maps for achieving the necessary reconciliation. It is no doubt crude to map their respective economic theories onto the platforms of India’s politicians; politics rarely achieves the subtlety of scholarship.

Still, in Mr. Modi (who has successfully fashioned himself as an upholder of business and market principles) and in Rahul Gandhi (the presumed Congress leader, whose party positions itself as a defender of the poor and disenfranchised), the nation is presented with clear alternatives that do correspond, however roughly, to the theories of India’s two leading economists.

Politics is rarely dignified, and it’s no place to arbitrate academic disputes. But there is still something healthy—and perhaps even edifying—about the debate the nation has just witnessed. India faces some serious choices; last week, those choices were crystallized.

—Mr. Kapur is the author of “India Becoming: A Portrait of Life in Modern India.”

A version of this article appeared August 3, 2013, on page C3 in the U.S. edition of The Wall Street Journal, with the headline: The Fight Over India’s Future.