Chidambaram endorses both Bhagwati and Sen's economic models

Amid raging debate over growth models suggested by economists Amartya Sen and Jagdish Bhagwati, Union Finance Minister P Chidambaram on Monday endorsed both of them saying they were equally important and emphasised the need to combine passion for growth with compassion for the poor.

"As far as growth is concerned, I think we need both the Bhagwati and Sen models," Chidambaram said while speaking at an event in Ahmedabad.

"India can never be a truly happy, prosperous country unless our passion for growth is combined with compassion for the poor. A large number of people in this country are poor," he said.

While Sen's model for growth advocates that India should invest more in its social infrastructure, the model put forth by Bhagwati argues that mere focus on growth can yield enough resources for investing in social sector schemes.

"A most constructive economic policy is incomplete without the element of compassion.. I support Dr Bhagwati's views.. there should be passion for growth and equally support Dr Sen's model which says there should be compassion for the poor," Chidambaram said.

"I think the Bhagwati model will never be complete unless complemented with Sen's model," he opined.

"Just as Dr Amartya Sen deserves the Nobel prize, I think Dr Jagdish Bhagwati also deserves a Nobel prize for his outstanding work," he said.

A fascinating debate between 'growth and equity' is going on between two pro-growth economic models suggested by 'titans' like Bhagwati and Sen.

"I know there are alternative narratives in politics and that is how politics should be," he said.

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Citing examples of Gujarat, a state carved out from erstwhile Bombay, Chidambaram said, "in democracy, people should have choice between one narrative and another narrative."

"When we look at the growth rates under the 11th Five Year Plan, Maharashtra was at 8.5 per cent and Gujarat at 9.5 per cent, not a big difference," he noted.

If you look at agricultural growth, then Maharashtra was at 2 per cent and Gujarat at 6.65 per cent. If we look at agri and allied sectors, then Maharashtra was at 1.93 per cent and Gujarat at 5.63 per cent, he said.

"Clearly we see Gujarat has an edge over Maharashtra in growth. We can say Gujarat scores over Maharashtra in GDP, and agricultural growth", Chidambaram said.

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But if we look at infant mortality rate (IMR), Gujarat has IMR of 44 per 1,000 in 2010-11, while Maharashtra’s was 28.

Look at the Maternal Mortality Rate (MMR) figures of 2007-09, 148 in Gujarat and 104 in Maharashtra, he said.

In case of total fertility rate, it was 2.5 per cent in Gujarat and 1.9 in Maharashtra. If we take immunisation coverage, then 94.7 per cent coverage in Gujarat and 99.45 per cent in Maharashtra, the FM said.

Looking at undernourished children up to the age of 3 years, in Gujarat, they are 41.3 per cent, whereas 32.5 per cent are there in Maharashtra, he said.

"So, if you combine compassion for the poor with growth, then the scenario changes," Chidambaram said adding "I am not here to politicise so won't say further."

"I am passionate about growth....but I must remind you that the passion for growth must be combined with compassion for the poor," he reiterated.