Jagdish Bhagwati on India

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4.7 • 4.4K Ratings

🗓️ 19 August 2013

⏱️ 66 minutes

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Summary

Jagdish Bhagwati of Columbia University talks with EconTalk host Russ Roberts about the economy of India based on his book with Arvind Panagariya, Why Growth Matters. Bhagwati argues that the economic reforms of 1991 ushered in a new era of growth for India that has reduced poverty and improved the overall standard of living in India. While supportive of social spending on the poor, Bhagwati argues that growth should precede higher levels of spending, providing the tax revenue for expanded spending.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:07.8	of Stanford University's Hoover Institution. Our website is econtalk.org or you can subscribe,
0:14.4	comment on this podcast, and find links and other information related to today's conversation.
0:19.6	You'll also find our archives where you can listen to every episode we've ever done going
0:23.3	back to 2006. Our email address is mailadycontalk.org. We'd love to hear from you.
0:31.5	Today is July 29, 2013, and my guest is Jagdish Bhagwati, Professor of Economics at Columbia
0:38.3	University. He is a prolific scholar and author in the area of international trade. His latest
0:44.4	book is Why Growth Matters, co-authored with Arvan Panagarya, a study of the past and the potential
0:51.9	future of the economy of India. Jagdish, welcome to Econ Talk. Welcome indeed. I'm glad you asked me.
1:00.4	Now your book starts out with an analysis of the past and how the Indian economy has
1:06.6	fared over the last decades. I want to start with an overview of the path of the economy since
1:12.1	independence a little over 60 years ago, and you point to some very distinctive policy regimes
1:18.2	over that time period. What were the key policies over that time period that changed, and what have
1:24.6	been the results? I think we started out very well in the first five-year plan, with very few controls,
1:35.9	fairly relaxed attitude towards foreign investment, towards industrial licensing, and so on.
1:41.3	That was 1951 to 56. The balance of payments was comfortable, and I think there was no, I mean,
1:48.8	basically it was five to five and a half percent growth rate. In fact, India was the envy of the world
1:56.4	at that time because of an excellent service. It had an independent judiciary, and the politicians
2:03.4	were just had just come out of the independence movement, and were not corrupted in any way,
2:09.5	because there was no great big licensing system, et cetera, to work with. But then what happened
2:15.1	was that we ran into a balance of payments crisis, which then led to essentially imposition
2:23.4	of several controls, which then proliferated enormously. I think that, in a way, it was so
	...

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