Context:

Renowned economist Jagdish Bhagwati (90) is preparing to retire this academic year after a 65-year-long career in research and academia. 

 

More on News:

• In an exclusive interview, Bhagwati shared his thoughts on key issues such as trade protectionism, India’s ambition to become a developed country, the middle-income trap, and the demographic dividend. 
• He also reflected on his differences with contemporary economist Amartya Sen. 

 

On Current Government:

• He expressed satisfaction with the current government, noting that while a functioning democracy needs an Opposition, India’s current opposition is weak. 
• He acknowledged that within the current coalition, some opposition does exist, which is beneficial for governance.

 

Policymaking in a Coalition Government:

• Bhagwati dismissed concerns that leading a coalition could hinder policymaking. 
• He praised the current government’s initiatives, particularly those focusing on women’s issues, and the role of women leaders in his Cabinet.

 

On Global Trade Protectionism:

• Bhagwati views the current wave of global protectionism as temporary. 
• He believes that, in the long run, most nations will recognise the benefits of an open economy. 
• He and fellow economist Arvind Panagariya have long advocated for the benefits of industrialisation and open markets, and Bhagwati sees the broader acceptance of these ideas in India.

 

Growth vs. Development Models:

• Bhagwati reiterated his belief that economic growth should precede income redistribution, criticising models like Kerala’s, which prioritise development first. 
• He argues that rapid growth and gainful employment are the best long-term solutions for poverty and inequality.

 

India’s Path to Becoming a Developed Nation by 2047:

• According to Bhagwati, India does not need to focus on specific sectors for growth. 
• The country has the skilled manpower and investment interest needed for general growth. 
• He urged policymakers to provide incentives and allow the economy to evolve naturally, without the government dictating where to invest.

 

On India’s Growth Being on “Autopilot”:

• Bhagwati believes that India is now on the path to becoming a developed nation, comparing the country’s entrepreneurial landscape favourably to the United States. 
• He noted that India no longer needs to rely on foreign expertise, as it has entered a new era of self-reliance and opportunity.

 

Concerns Over the Middle-Income Trap:

• Bhagwati dismissed the concept of the middle-income trap as a statistical artefact, labelling it as a misguided concern propagated by organisations like the World Bank and IMF. 
• He argued that India simply needs policies that promote growth and local entrepreneurship.

 

Making the Most of India’s Demographic Dividend:

• Bhagwati emphasised the importance of rapid economic growth to absorb India’s large young population into the workforce. 
• He also highlighted the need for improved quality in higher education, pointing out that India’s premier institutions, like the IITs and IIMs, are not highly ranked globally.

 

India’s Protectionist Measures:

• Bhagwati criticised India’s recent protectionist policies, stating that they are unnecessary even in the face of rising protectionism in the West. 
• He argued that India should maintain an open trade policy regardless of what other countries do, as this would ultimately benefit the country.

 

[stextbox id=’info’]

Sen-Bhagwati Debate

The debate between Amartya Sen and Jagdish Bhagwati represents a significant intellectual clash regarding economic policy in India, particularly around the themes of growth, social welfare, and development strategies. 

Key Points:

• Philosophical Foundations: Amartya Sen advocates for a model that emphasises social infrastructure, arguing that investments in education and healthcare are crucial for enhancing productivity and fostering sustainable growth. He believes that social equity lays the groundwork for economic progress. Jagdish Bhagwati, on the other hand, champions a growth-first approach, asserting that rapid economic growth generates the resources necessary for social investments. He contends that while growth may initially increase inequality, it ultimately provides the means for redistribution.
• Context and Evolution: Sen co-authored An Uncertain Glory: India and Its Contradictions, while Bhagwati collaborated on Why Growth Matters, each presenting their respective arguments about India’s economic trajectory.

[/stextbox]

 

Differences with Amartya Sen:

• Bhagwati acknowledged his long-standing disagreements with fellow economist Amartya Sen, calling them inevitable among leading intellectuals. 
• He said that rivalries and differences are part of the academic process and remain unresolved.

[wpdiscuz-feedback id=”er65f83fi1″ question=”Is this helpful ? ” opened=”0″]

In conclusion, Bhagwati is optimistic about India’s future, particularly in terms of its economic trajectory and the potential to become a developed country. He remains critical of protectionist policies and advocates for continued growth and entrepreneurship to achieve sustainable development.[/wpdiscuz-feedback]

 

---

 

subscribe to our Youtube Channel for more Valuable Content – TheStudyias

Download the App to Subscribe to our Courses – Thestudyias

The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH

Context:

S. Jaishankar, at the Kautilya Economic Conclave, highlighted the increasing weaponisation of trade and its impact on globalisation, national security, and protectionism.

 

Key Highlights from the Speech:

• Backlash Against Globalisation: Job losses and dissatisfaction in many societies due to globalisation over the past 25 years.
  • Political outcomes influenced by economic insecurities, resulting in social and political backlash.
  • Deepening interdependencies with globalised supply chains, but with negative effects on employment and quality of life.
• Weaponisation of Trade: Trade is no longer just globalised; it’s also weaponised, with countries using economic tools (e.g., tariffs, sanctions) for national security and foreign policy purposes.
  • Examples include China’s use of trade to exert political pressure on countries like Norway, Australia, and Lithuania.
  • Countries compromise economic efficiency to prioritise national security and job protection.
• Rising Protectionism: Increasing protectionist measures in response to job losses and national security concerns.
  • India’s defensive actions include over 30 anti-dumping measures on Chinese products in 2024, aimed at protecting domestic industries.
  • The rise of national security filters over economic transactions, particularly in high-tech sectors.
• Shift in Global Focus: Conflicts in Ukraine and West Asia have shifted attention away from critical global issues like:
  • Multilateral Development Bank (MDB) reforms
  • Climate change
  • India–Middle East–Europe Economic Corridor (IMEC)
• India–Middle East–Europe Economic Corridor (IMEC): Despite diverted focus, IMEC remains a viable project with ongoing collaborations between India, the UAE, and Saudi Arabia.

• Rising geopolitical risks further justify the need for the corridor, though progress has slowed.

 

Weaponisation of Trade:

• Concept: Countries use trade tools (e.g., tariffs, sanctions) to pressure others for political or economic goals.
• China has aggressively employed this strategy by targeting countries like Australia, Norway, and Lithuania.
• Historical Context: Trade embargoes have existed for centuries, but modern-day sanctions are more targeted.
• Financial sanctions are increasingly used instead of broad embargoes.
• China’s Role: China employs trade restrictions to maintain political leverage, such as limiting exports of critical minerals in response to U.S. policies.

• Pushes for de-dollarisation by promoting the internationalisation of the renminbi yuan.

 

Global Pushback

• Quad and G7 Statements: The Quad (India, Australia, Japan, US) and G7 reject coercive economic practices and advocate for national autonomy in economic policies.
• Supply Chain Diversification: Countries are focusing on friend-shoring and economic diversification to build resilient supply chains (e.g., the Mineral Security Partnership).

 

Implications for India

• Protectionism: India is adopting protectionist policies, with a focus on domestic industries and shielding them from predatory pricing by China.
• Global Supply Chains: India must secure interests in high-tech sectors, balancing global integration with protecting critical sectors from foreign influence.
• Foreign Relations: India’s foreign policy is increasingly shaped by economic security concerns, particularly in its disputes with China.
• Strategic Autonomy: India’s approach is rooted in strategic autonomy, cautiously integrating into global supply chains while safeguarding national industries.

 

Way Forward:

• Strengthening Domestic Industries: Initiatives like Make in India and Atmanirbhar Bharat focus on building self-reliance and reducing dependency on adversarial nations.
• Diversifying Trade Partnerships: Strengthen ties with friendly nations and regional alliances (e.g., Indo-Pacific) while advocating for global trade reforms at the WTO and MDBs.

 

---

 

subscribe to our Youtube Channel for more Valuable Content – TheStudyias

Download the App to Subscribe to our Courses – Thestudyias

The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH