Sen Vs. Bhagwati: Debate on Growth and Distribution

Bhagwati’s Approach

• The Sen–Bhagwati debate centres on the relative importance of economic growth and distribution/redistribution in achieving poverty reduction and social development in India.

• Jagdish Bhagwati places greater emphasis on economic growth than on redistribution and is a leading advocate of economic reforms involving:

  • Liberalisation of economic controls through removal of the licensing-permit system and restrictions on industrial activity.

  • A greater role for the private sector in the growth process.

  • Globalisation through liberalisation of foreign trade and foreign investment.

  • He argues that these measures accelerate economic growth and promote social advancement.

• Bhagwati views economic growth as an instrument of poverty reduction and welfare enhancement, operating through two main channels:

  • Growth creates more gainful employment opportunities for the poor, enabling them to earn higher incomes and escape poverty; higher incomes also allow greater private expenditure on education and health, improving welfare further.

  • Growth increases government revenue, enabling higher public expenditure on education, health, and social welfare programmes targeted at the poor.

• Bhagwati argues that the growth-centred model has repeatedly demonstrated its ability to reduce poverty and raise living standards, while critics continue to stress the need for redistribution of income and wealth.

• He rejects Amartya Sen’s claim that Kerala and Bangladesh demonstrate the superiority of redistribution-led development in reducing poverty more rapidly than India as a whole.

• Bhagwati praises the Gujarat model of development, arguing that it generated substantial employment opportunities through the activities of private corporate firms supported by the government under Modi’s leadership.

• Criticising Sen’s redistributive development model, Bhagwati argues that in poor countries where the poor vastly outnumber the rich:

  • Redistribution can increase the consumption of the poor only marginally (for example, by merely a chapati a day).

  • Such gains are unlikely to be sustainable in conditions of low income and high population growth.

  • Consequently, for most developing countries, economic growth is the principal strategy for inclusive development, including the poorest and most marginalised sections of society.

• Bhagwati advocates a market-oriented growth strategy in which:

  • The private sector plays the dominant role in driving economic expansion.

  • The government should provide incentives to private enterprise and remove restrictive controls that hinder its functioning.

  • Liberalisation, Privatisation, and Globalisation (LPG) reforms, initiated in India under Dr. Manmohan Singh, are essential for achieving rapid growth.

  • Rapid economic growth generated through these reforms would ultimately reduce poverty and unemployment.