Dilip Mookherjee, Professor, Boston University:
I agree with Sen that lagging human development in India is a great shame and this is where our country needs to focus on, rather than just growth.
Growth itself does reduce poverty as Bhagwati argues, but the extent to which it does so depends on societal inequality and on the kind of anti-poverty safety net that the government creates. India is abysmal in the latter respects compared even to other low/middle income countries, as Sen argues. So we do need to boost measures to reduce inequality and poverty.
Where I disagree with Sen is how to achieve this. The 'rights' approach used to justify one gigantic entitlement program after another is not the most effective way of achieving success. Here are the primary reasons:
(a) We need to prioritize different kinds of rights, figure out the costs of each and decide what we can afford. We need to think about the dynamics of poverty and how to ensure it is less of a trap. The right to drinking water and public health seems to me more primary than the right to food, as the former is related to the right to life itself.
The right to education and health, especially for young children, seems to me more primary than the right to food, as they have consequences for future poverty and mobility in our society. Feeding someone today is fine but as long as we do nothing to attack the primary causes of poverty that person is going to be hungry again tomorrow and day after tomorrow.
We have to focus on creating capabilities (to use Sen's own terminology) so the poor today will no longer be poor in the future. For this we need to focus on access to drinking water, sanitation, early childhood nutrition, health and education. More than access to food today, which is a very short-term objective. We need to create a welfare system that does not breed dependence of the poor; rather we need to induce them to become less poor in the future and provide them with the means to do so.
(b) The cost of trying to feed the entire nation through PDS is prohibitive. The country is reeling from the costs of NREGA, which is one of the primary reasons of the current macroeconomic crisis. Once created these large public programs are very hard to dismantle and replace by smarter and more efficient systems for combating poverty.
(c) PDS is highly inefficient and corrupt. The Food Security bill will increase the scope of corruption and undermine public faith in the government. It will induce another round of scandals and scams that will further paralyze the government.
(d) The huge resource costs and macroeconomic drag that the Food Security Bill will create, will reduce resources available to the government to invest in infrastructure and higher education, which will bring the long-term growth rate down.
This will reduce the extent of productive jobs created, for the poor in rural areas to move out to in the urban areas --- one of the primary ways in which future poverty will come down. Eventually this is the main engine for reduction in long term poverty, as we see in the context of China and other east Asian societies. In this respect I agree with Bhagwati.
Overall I would argue that we need to create a smarter, more effective anti-poverty system which will be more effective both in the sense of resource costs and in the sense of reducing future poverty. It would invest selectively in drinking water, sanitation, early childhood nutrition, health and education.
It will make pragmatic use of whichever means is found to be most effective --- direct public provision using smart cards to identify beneficiaries, cash payments conditioned on use on health and education services, or vouchers for the same.
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This kind of difference between eminent economists do happen with their priorities, slant and so on. The critical issue is role of the government and the market economy.
No one is saying poverty reduction is not important, but they differ on cause and effect. There is no question of giving precedence to one or another.
China has success in removing poverty and providing goods and services to its people. We, despite our plan model, failed to do so. Of course, there is a relation between growth and poverty reduction.
The kind of poverty reduction you see in recent times when growth was higher was not evident earlier. There is no trade off per se between growth and poverty reduction. It is a useful debate.
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Planning Commission member Abhijit Sen:The sort of redistribution that people are seeking is not about taking away some thing from upper class.
It is about how to use taxes -- for more social welfare schemes, say MNREGA or for building more infrastructure facilities, say laying roads. While social welfare schemes help the poor at the margin, roads will help him in the long run.
But, for both taxes are needed and for that growth has to be there. So, growth is necessary but not sufficient condition to help the poor.
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National Statistical Commission chairman Pronab Sen:
The debate itself is based on outdated notions of growth. It is polarising the issue which should not be polarised.
One can say that growth is accumulation of capital by higher classes of income group from where savings come and then benefits percolate downwards.
However, investment in consumption by lower income sections could be as much or more productive than investments in capital.
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Rajiv Kumar, Senior Fellow with the Centre of Policy Research:
Growth is a necessary condition of poverty reduction. Without growth, you cannot have poverty reduction.
However, growth has to be combined with good governance to deliver goods and services. Tragedy of India is that despite good growth, we are unable to give good governance. It is not growth which is to be blamed but a break down of delivery of goods and services.
The most prominent example is access to good and quality education, which has completely broken down. To pose growth and poverty reduction as trade off does not make a sense to me.
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