India will not carry any clout at the international level if it falls behind in economic growth,cautioned top international economist Jagdish Bhagwati,even as he exuded optimism about India growing at around 9 per cent with additional reforms.
“India,if it falls behind significantly,will not carry any clout at all. So that translates into your economics as well,” Bhagwati told the Bloomberg TV in an interview on Wednesday.
Bhagwati disagreed with the view of Nobel Laureate Amartya Sen that Indian growth with that of China’s could not be compared.
“I think Sen is really quite wrong. I think that his worry is that if we talk about growth,we won’t do anything about the poor. But that’s again quite wrong as we point out in our book,” said the Indian American professor referring to his latest book ‘Why Growth Matters?’
“If you don’t take a strictly economic point of view,the very fact that China is growing much faster,means it gets much greater clout in the world economy. And in terms of being able to get its way,” he said.
Bhagwati said Indian growth has been rather low in the last two years. This was mainly because of the strict monetary policy and reluctance on the part of the bureaucrats to take decisions.
“Our monetary policy was extremely strict. And (in) about two years we had about 12 increases in the interest rate. And two,because there was a lot of dissatisfaction with a few scams in the system and corruption,” he said.
“A bureaucrat loses his job if he takes any initiative and something goes wrong. He keeps his job if he doesn’t take any initiative,” he added.
Bhagwati queried whether Chief Economic Advisor Raghuram Rajan “from the University of Chicago’s Booth” come to the financial rescue of India.
“I think he’s certainly the voice behind a new budget which is trying to be expansionary. But I think the main problem in India is keeping the momentum going,” he said.
“Because after the short-term things are,problems are over,we’ll be resuming,in my judgement,the 7 to 7.5 (per cent) growth rate. Because of all the reforms which produced those are still in place. We haven’t reversed any.
“So they are producing the same growth in part. But if he could do more reforms,and that’s what we deal with in the book,we could shoot up to nine per cent,in about two to three years,” Bhagwati said.