Wednesday, February 23, 2011

Amartya Sen’s nod to the licence-permit raj

Prof. Arvind Panagariya politely says that the acclaimed leftist economist Prof.Sen favours the growth killer "licence-permit raj" even now!!.

Some excerpt: 
  • Sen leaves the impression that growth is at best a sideshow when it comes to the well- being of the poor. He essentially ignores the direct contribution growth makes to the creation of income and employment for the poor when he states: “The central point to seize is that while economic growth is an important boon for enhancing living conditions, its reach depends greatly on what we do with the fruits of growth. To be sure, there are large numbers of people for whom growth alone does just fine, since they are already privileged and need no social assistance.” Thus, contrary to the evidence that growth directly benefits the poor, Sen emphasises the accrual of such benefits only to those “already privileged” with the benefits to the poor depending principally on how what the government does with the “fruits of growth” . Why does it matter whether you choose to see growth as central to improving the wellbeing of the poor or as a sideshow ? Because the policies you would advocate critically depend on this choice. Bhagwati, who sees growth as central, has long advocated policy reforms that enhance growth prospects while also recommending increased expenditures on antipoverty programmes. 
  • Sen, who sees growth as a sideshow, has rarely spoken in favour of promarket reforms, implicitly giving a nod to the licence-permit raj, which denied higher incomes and better employment opportunities to the poor. All politicians now recognise the centrality of growth in generating revenues to finance expenditures on health, education and employment programmes in a poor country like India. Because India started extremely poor at Independence and also grew very slowly for nearly four decades, successive governments failed to muster enough revenues to finance expenditures on these sectors. As a concrete example, Article 45 of the directive principles of state policy in the Constitution had required free compulsory primary education . But despite repeated attempts throughout, the goal remained unfulfilled until 2010 when accelerated growth finally yielded sufficient revenues to permit the implementation of the right to education as a fundamental right. 
The article published by Prof Sen in The Hindu is here.

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