What does the AAP challenge amount to nationally? Not a whole lot: Arvind Panagariya

Interview with Bhagwati Professor of Economics, Columbia University

Earlier this year, noted economists Jagdish Bhagwati and Arvind Panagariya had a heated debate with Nobel laureate Amartya Sen on growth versus redistribution. While Sen believes India should invest more in social infrastructure to raise productivity, Bhagwati and Panagariya stress on growth, which will deliver resources for investment in the social sector. Has the phenomenal success of the Aam Aadmi Party (AAP) in the recent Delhi Assembly elections shifted the focus to redistribution of resources in Indian politics? Panagariya, Bhagwati Professor of Economics at Columbia University, tells Indivjal Dhasmana now, the Indian electorate is demanding sustained improvement in their lives, not a one-time transfer of money. Edited excerpts:

Amartya Sen has said AAP's rise is an important departure in politics, as this has challenged established institutions. Do you support his view?

Sen is one of many commentators to have said this. The real question is what does this challenge amount to nationally? Not a whole lot — that is the answer if one considers the totality of the recent elections. Instead, the big news was the Modi tsunami. Whether the AAP challenge turns into a national phenomenon in 2014 remains to be seen.

AAP’s victory in the Delhi Assembly elections stunned many political pundits. The party’s emphasis is on redistribution. Do you think India’s electorate gave more stress on redistribution than growth?

Traditionally, yes! But this has changed dramatically in recent years. Having seen rapid growth change their fortunes within a generation, voters are more demanding now. They ask for an improvement in their fortunes, that these be more sustainable, instead of one-time transfer. This is why performers such as Modi, Patnaik, Nitish, Raman and Shivraj Singh are repeatedly returned to power, while weaker leaders such as Ashok Gehlot lost despite voluminous redistributive programmes.

In the 60s, the political experiment of the Swatantra Party didn't succeed. It was too pro-reforms. But so far, AAP seems to be successful, albeit only in the Delhi Assembly elections. Do you think socialistic rhetoric catches popular imagination more than pro-reform hard facts?

If socialistic rhetoric or even the delivery of socialist programmes worked, Ashok Gehlot would have won in Rajasthan. Free medicines, food and employment constituted the platform of the Congress in Rajasthan. AAP did promise many goodies, but that wasn't the cause of its impressive showing. It was the availability of a vast number of committed volunteers in Delhi, superior organisation and an effective door-to-door campaign. It was also helped by the corruption scandals under the Congress-run central government, from which Anna Hazare's movement and, subsequently, AAP gathered much steam, greatly overshadowing even the generally good work done by Sheila Dikshit in Delhi.

AAP has given a set of conditions before it takes support from the Congress in the Delhi Assembly. These include opposition to FDI (foreign direct investment) in retail. Do you think this kind of economics will take the party far?

I am not persuaded there is a strategy that will give Delhi-like play to AAP in other regions. Because the Hazare moment flourished in Delhi, the AAP success there was a very special case. One must ask why they had zero presence in Rajasthan, Madhya Pradesh and Chhattisgarh or whether the party will have much success in Mumbai, where the Hazare movement had seen no traction.

Do you see more populist schemes from the coalition at the Centre ahead of the general elections?

Well, even as we speak, minister Jairam Ramesh has announced the expansion of MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) to free toilets.