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Economist and Columbia University professor Jagdish Bhagwati is seen as the Modi government's guiding light. The PM is taking bold steps, he tells Sagarika Ghose, but cautions that he must not let Hindutva hardliners undermine his economic agenda:
Is it fair to say that honeymoon's over, it's time to get down to business?
This presupposes that he hasn't got down to business. He has got down to business. In 1991, when we had what I call the first revolution, we wanted to introduce a lot of changes. That was under great pressure because we were in a crisis. There wasn't a clear agenda except in some minds. Then, it was like clearing up after a tsunami. The Rao-Singh government did a few things dramatically, like clearing up investment licencing. Take trade liberalization: Industrial tariffs were over 100%, it took 15 years to bring them to an average of 10%. That was gradualism. When you look at people trying to undertake massive reform, which is what the PM is now doing in what I call the second revolution, you can't expect them in a political system to go maximum speed. If you do that, things will get back at you because you have to negotiate minefields. I'm a gradualist, not a shock therapist. Look at whether the guy's moving in the right direction. There's no question that certain things the PM has done are in the right direction.
Such as?
Shaking up the bureaucratic system-that's very important. We're very hierarchical, going back to the caste system. Indians are used to kicking down and licking up. People beneath you must accept what you do. The PM is defining the point that you must get to work on time, have to ensure files move very fast. That coming from the top makes bureaucrats shape up. The next question is whether he'll be able to define a vision. I was a bit worried that he wasn't making an economics appointment. Economics is a jealous mistress. President Mitterand was once standing in front of his library. A journalist asked is there a book on economics there. He proudly answered not one. Six months later there was a crisis. The PM was hesitating, but he had to get the best man. To me, he has got the best man-someone who combines a grasp of economics with attention to detail. I mean Arvind Panagriya. He was worth waiting for. You need a superb mind. We Oxford and Cambridge types are up in the air a bit.
But have there been radical changes?
Depends on what you mean by radical. It's like asking what do you mean by good governance. Modi is trying to scale up what he did in Gujarat. The Gujarat DNA partly consists of creating prosperity. How do you do that? You do that through liberalization, international trade, encouraging investments. Ask an average Gujarati businessman if he's afraid of competition and trade, he'll say no the other guy should be. They're good at doing it. They use foreign investment as a way of collaboration. They don't expect to be overwhelmed by foreigners. The attitude is not of a small country. India's problem is that it is a big country with the mentality of a small country. That's not a part of the Gujarat DNA and he's trying to scale it up. He's doing it dramatically. Of course, he's won't be able to do retail liberalization because that's where politics comes. He can't go against his party which has traditionally had the petit bourgeoisie and petty shopkeepers. Now he has a more diversified constituency, he can't abandon the core. I believe he'll do it in year while he consolidates his power.
Is there danger of disappointment if you raise expectations too high?
It's not about raising expectations too high, it's about raising your vision high. President Obama used to play basketball. Now he's playing golf, putting the ball into little holes, narrowing his vision. You must have that vision. That the PM has. He has a definite idea that growth is really important and how to bring its benefits to the poor.
There's been criticism against the recent Ordinances and that good governance isn't Ordinance Raj, your views?
This presupposes that he's not mastered the political system, such as Rajya Sabha. When he moves into executive orders, ordinances that's exactly what Obama has had to do, given that legislature doesn't function. Constitutionally you can use executive action. So he's not sitting back, but saying I'm going to do a number of these things through executive action.
Swaminathan Aiyar says Ordinances are a sign of a weak government?
He's come in with a fantastic electoral result. He has strength, but the structural problem is such that in the legislature he's unable to implement very important changes, such as on land acquisition. In all countries you've to have an idea of what is socially desirable and then have rules under which you acquire land. Why was the government helping industrialists get land at low prices? I don't see why Tatas should've been given land by a communist government in Bengal at a low price. Let them pay the market price. Government shouldn't get involved. When there's a social purpose, which we politically define, it's different. In America it's called 'taking'. We have to define that (social purpose). We can only define it politically. We need to acquire land according to the purpose we've defined politically.
But land acquisition can't become displacement and exploitation of farmers?
It becomes exploitation when a majority of people are being told you can't hold out. But if a small minority is doing it that shouldn't be allowed. Many people selling land want to be able to sell.
Do you believe there's a battle between Modi and the RSS and Sangh Parivar, on the economy?
If you talk about RSS, Modi-having talked with him several times and looked at his record -he just happened to be born in an RSS environment. I keep drawing analogies with America. Take Obama. When he was coming in, he was going to a radical church. That's how he began life, but he grew out of it.
So has Modi grown out of RSS?
That's my strong belief. I've seen nothing after the 2002 riots by him that aids anti-Christian or anti-Muslim sentiments. He ought to speak out against Hindu hardliners. He ought to say this is not the way Hinduism is because Hinduism is not a proselytizing religion. Many Christians who converted dalits often say when dalits convert, they put Christ's image with the image of their other god from their pantheon and the pastor would say you've to throw out others. That's not the spirit of Hinduism.
What would you like Modi to say?
I'd like him to say Hinduism isn't a proselytizing religion. If you become Christian or Muslim that's fine, you're still one of us. That's Hinduism. It's inclusive. It's the proselytizing religions that are exclusive. The real Hinduism consists in being inclusive and the notion of converting people foreign to us, totally foreign. That's what he should tell these Sangh Parivar people, who I think, are fundamentally wrong-headed about Hinduism. If he said something like that he should make an impact. Question is when would he want to say that. The situation is becoming one where too many things are going wrong and people are beginning to worry.
Are you worried about the Hindutva surround sound?
Yes I am. It's in contradiction to what Hinduism stands for. They're wrong in doing it. And what it's doing is giving a handle to people who want to undermine the PM on his economic agenda which is to be doing something important for the poor. What worries me is his agenda and approach could be undermined by growing discontent, social disharmony.
How much of social disharmony impacts the economy?
I would say so far there's no evidence of any disruptive effect. It reminds me of a Punch cartoon of two dervishes in the desert reading a Cario newspaper. It's peaceful and one of them says, "But the newspaper says we're in ferment". (laughs) You do have to plan ahead. He has to move in this direction, I'm convinced the PM has to speak out on this.
Who do you think will prevail - Bhagwati or (Mohan) Bhagwat?
Internationally, people may think it's the same guy, they can barely pronounce our names! I think Bhagwati will prevail. The one impressive thing about the PM is that he's a doer. When I spent seven hours with him when he was CM it was a revelation how focused he could be, how hands on he is, an unusual politician with a grasp of facts and figures and clarity of vision. One thing that impressed me was when he told me of his interest in Vivekananda. Two things impressed me. Vivekananda was from Bengal, so there was no son-of-the soil rubbish. He was admiring someone who was not Gujarati and the reason he liked Vivekananda was because Vivekananda had shifted from the Ramkarishna Paramhansa view of bhakti marga of "me and god". Vivekananda was into karma yoga-"me and mankind". That's the other part of the Gujarati DNA. We accumulate wealth but spend it on society. I think that means he's going to persist. He's got a clear vision. He sees growth as a way to accumulate resources, pull up people into gainful employment and spend that money. Problem with UPA 2 was that they wanted to spend money and were spending it but they had nothing coming in. That led to inflation and undermined them. This clarity of vision was lacking. You must have the money to spend and how you get the money-and that's the great Gujarati talent-is by making money.
Is the government making money?
He's scaling it up. Look at what's happening this week. Large numbers of people are coming in waiting to invest. It's unbelievable.
Is Modi an instinctive reformer? Is he India's Thatcher or Reagan?
Whatever adds to growth, prosperity, lifting the poor above the poverty line is part of his vision. Thatcher and Reagan were dismantling a lot. They were conservatives who believed in the trickledown approach - a passive strategy. Modi's different. He's into the pull-up strategy, using growth to pull people up. That's radical, requires a lot of action. You're going to see from him not just vision or strategy of growth, but how to bring about growth, how to then use the monies to get the maximum bang out of your buck because it's not just to accumulate revenues.
Is the centralized government, all powers concentrated in the PMO, a problem?
I don't think so. When you talk decentralization he sees the states as actors. He was one experimenting with things which weren't popular. Take the Rajasthan model. Rajasthan's moving into labour reforms. That's something other states can replicate. So, that diffusion and experimentation gets away from the notion that everything is centralized into what Modi wants. He's decentralising to the states. Like the Maoist policy of "let a hundred flowers bloom", except Mao chopped off heads. The PM genuinely sees from his experience that we must allow people to experiment. That leads to more innovation.
Should Indians be more patient? Are people expecting too much?
That's inevitable after the UPA 2 experience. I remember Manmohan Singh saying how people used to ask Rao why we are so behind. People get impatient. The diaspora and our youngsters who voted massively for change are impatient. Impatience is good because it keeps you on your toes.
As professor at Columbia, an eminent independent academic, does the Sangh Parivar role in education bother you?
I am politically left of centre, most economists are. When we run the system we do the same. On Ganesha having a plastic surgery, the PM got carried away because this is a metaphorical thing. He's not like Murli Manohar Joshi. We go back in history to derive a sense of self-importance because we've lost it in the last many years. But to gain it we don't have to do crazy things. Those who believe these things shouldn't be allowed to dictate textbooks, most definitely not. You can't teach creationism. The best antidote to that is actually education. When people are educated they won't believe this sort of thing. The best way to look at it is, as my friend Tapan Raychaudhuri used to say, look at how much imagination there is in the Ramayana and Mahabharat. The best antidote to such rubbish is more education, no matter what the textbooks say. When mind is opened up, you automatically see this is rubbish.
How many marks out of 10 so far to Modi?
I give him 9.
Modi must speak out against Hindu hardliners: Jagdish Bhagwati - The Times of India
Is it fair to say that honeymoon's over, it's time to get down to business?
This presupposes that he hasn't got down to business. He has got down to business. In 1991, when we had what I call the first revolution, we wanted to introduce a lot of changes. That was under great pressure because we were in a crisis. There wasn't a clear agenda except in some minds. Then, it was like clearing up after a tsunami. The Rao-Singh government did a few things dramatically, like clearing up investment licencing. Take trade liberalization: Industrial tariffs were over 100%, it took 15 years to bring them to an average of 10%. That was gradualism. When you look at people trying to undertake massive reform, which is what the PM is now doing in what I call the second revolution, you can't expect them in a political system to go maximum speed. If you do that, things will get back at you because you have to negotiate minefields. I'm a gradualist, not a shock therapist. Look at whether the guy's moving in the right direction. There's no question that certain things the PM has done are in the right direction.
Such as?
Shaking up the bureaucratic system-that's very important. We're very hierarchical, going back to the caste system. Indians are used to kicking down and licking up. People beneath you must accept what you do. The PM is defining the point that you must get to work on time, have to ensure files move very fast. That coming from the top makes bureaucrats shape up. The next question is whether he'll be able to define a vision. I was a bit worried that he wasn't making an economics appointment. Economics is a jealous mistress. President Mitterand was once standing in front of his library. A journalist asked is there a book on economics there. He proudly answered not one. Six months later there was a crisis. The PM was hesitating, but he had to get the best man. To me, he has got the best man-someone who combines a grasp of economics with attention to detail. I mean Arvind Panagriya. He was worth waiting for. You need a superb mind. We Oxford and Cambridge types are up in the air a bit.
But have there been radical changes?
Depends on what you mean by radical. It's like asking what do you mean by good governance. Modi is trying to scale up what he did in Gujarat. The Gujarat DNA partly consists of creating prosperity. How do you do that? You do that through liberalization, international trade, encouraging investments. Ask an average Gujarati businessman if he's afraid of competition and trade, he'll say no the other guy should be. They're good at doing it. They use foreign investment as a way of collaboration. They don't expect to be overwhelmed by foreigners. The attitude is not of a small country. India's problem is that it is a big country with the mentality of a small country. That's not a part of the Gujarat DNA and he's trying to scale it up. He's doing it dramatically. Of course, he's won't be able to do retail liberalization because that's where politics comes. He can't go against his party which has traditionally had the petit bourgeoisie and petty shopkeepers. Now he has a more diversified constituency, he can't abandon the core. I believe he'll do it in year while he consolidates his power.
Is there danger of disappointment if you raise expectations too high?
It's not about raising expectations too high, it's about raising your vision high. President Obama used to play basketball. Now he's playing golf, putting the ball into little holes, narrowing his vision. You must have that vision. That the PM has. He has a definite idea that growth is really important and how to bring its benefits to the poor.
There's been criticism against the recent Ordinances and that good governance isn't Ordinance Raj, your views?
This presupposes that he's not mastered the political system, such as Rajya Sabha. When he moves into executive orders, ordinances that's exactly what Obama has had to do, given that legislature doesn't function. Constitutionally you can use executive action. So he's not sitting back, but saying I'm going to do a number of these things through executive action.
Swaminathan Aiyar says Ordinances are a sign of a weak government?
He's come in with a fantastic electoral result. He has strength, but the structural problem is such that in the legislature he's unable to implement very important changes, such as on land acquisition. In all countries you've to have an idea of what is socially desirable and then have rules under which you acquire land. Why was the government helping industrialists get land at low prices? I don't see why Tatas should've been given land by a communist government in Bengal at a low price. Let them pay the market price. Government shouldn't get involved. When there's a social purpose, which we politically define, it's different. In America it's called 'taking'. We have to define that (social purpose). We can only define it politically. We need to acquire land according to the purpose we've defined politically.
But land acquisition can't become displacement and exploitation of farmers?
It becomes exploitation when a majority of people are being told you can't hold out. But if a small minority is doing it that shouldn't be allowed. Many people selling land want to be able to sell.
Do you believe there's a battle between Modi and the RSS and Sangh Parivar, on the economy?
If you talk about RSS, Modi-having talked with him several times and looked at his record -he just happened to be born in an RSS environment. I keep drawing analogies with America. Take Obama. When he was coming in, he was going to a radical church. That's how he began life, but he grew out of it.
So has Modi grown out of RSS?
That's my strong belief. I've seen nothing after the 2002 riots by him that aids anti-Christian or anti-Muslim sentiments. He ought to speak out against Hindu hardliners. He ought to say this is not the way Hinduism is because Hinduism is not a proselytizing religion. Many Christians who converted dalits often say when dalits convert, they put Christ's image with the image of their other god from their pantheon and the pastor would say you've to throw out others. That's not the spirit of Hinduism.
What would you like Modi to say?
I'd like him to say Hinduism isn't a proselytizing religion. If you become Christian or Muslim that's fine, you're still one of us. That's Hinduism. It's inclusive. It's the proselytizing religions that are exclusive. The real Hinduism consists in being inclusive and the notion of converting people foreign to us, totally foreign. That's what he should tell these Sangh Parivar people, who I think, are fundamentally wrong-headed about Hinduism. If he said something like that he should make an impact. Question is when would he want to say that. The situation is becoming one where too many things are going wrong and people are beginning to worry.
Are you worried about the Hindutva surround sound?
Yes I am. It's in contradiction to what Hinduism stands for. They're wrong in doing it. And what it's doing is giving a handle to people who want to undermine the PM on his economic agenda which is to be doing something important for the poor. What worries me is his agenda and approach could be undermined by growing discontent, social disharmony.
How much of social disharmony impacts the economy?
I would say so far there's no evidence of any disruptive effect. It reminds me of a Punch cartoon of two dervishes in the desert reading a Cario newspaper. It's peaceful and one of them says, "But the newspaper says we're in ferment". (laughs) You do have to plan ahead. He has to move in this direction, I'm convinced the PM has to speak out on this.
Who do you think will prevail - Bhagwati or (Mohan) Bhagwat?
Internationally, people may think it's the same guy, they can barely pronounce our names! I think Bhagwati will prevail. The one impressive thing about the PM is that he's a doer. When I spent seven hours with him when he was CM it was a revelation how focused he could be, how hands on he is, an unusual politician with a grasp of facts and figures and clarity of vision. One thing that impressed me was when he told me of his interest in Vivekananda. Two things impressed me. Vivekananda was from Bengal, so there was no son-of-the soil rubbish. He was admiring someone who was not Gujarati and the reason he liked Vivekananda was because Vivekananda had shifted from the Ramkarishna Paramhansa view of bhakti marga of "me and god". Vivekananda was into karma yoga-"me and mankind". That's the other part of the Gujarati DNA. We accumulate wealth but spend it on society. I think that means he's going to persist. He's got a clear vision. He sees growth as a way to accumulate resources, pull up people into gainful employment and spend that money. Problem with UPA 2 was that they wanted to spend money and were spending it but they had nothing coming in. That led to inflation and undermined them. This clarity of vision was lacking. You must have the money to spend and how you get the money-and that's the great Gujarati talent-is by making money.
Is the government making money?
He's scaling it up. Look at what's happening this week. Large numbers of people are coming in waiting to invest. It's unbelievable.
Is Modi an instinctive reformer? Is he India's Thatcher or Reagan?
Whatever adds to growth, prosperity, lifting the poor above the poverty line is part of his vision. Thatcher and Reagan were dismantling a lot. They were conservatives who believed in the trickledown approach - a passive strategy. Modi's different. He's into the pull-up strategy, using growth to pull people up. That's radical, requires a lot of action. You're going to see from him not just vision or strategy of growth, but how to bring about growth, how to then use the monies to get the maximum bang out of your buck because it's not just to accumulate revenues.
Is the centralized government, all powers concentrated in the PMO, a problem?
I don't think so. When you talk decentralization he sees the states as actors. He was one experimenting with things which weren't popular. Take the Rajasthan model. Rajasthan's moving into labour reforms. That's something other states can replicate. So, that diffusion and experimentation gets away from the notion that everything is centralized into what Modi wants. He's decentralising to the states. Like the Maoist policy of "let a hundred flowers bloom", except Mao chopped off heads. The PM genuinely sees from his experience that we must allow people to experiment. That leads to more innovation.
Should Indians be more patient? Are people expecting too much?
That's inevitable after the UPA 2 experience. I remember Manmohan Singh saying how people used to ask Rao why we are so behind. People get impatient. The diaspora and our youngsters who voted massively for change are impatient. Impatience is good because it keeps you on your toes.
As professor at Columbia, an eminent independent academic, does the Sangh Parivar role in education bother you?
I am politically left of centre, most economists are. When we run the system we do the same. On Ganesha having a plastic surgery, the PM got carried away because this is a metaphorical thing. He's not like Murli Manohar Joshi. We go back in history to derive a sense of self-importance because we've lost it in the last many years. But to gain it we don't have to do crazy things. Those who believe these things shouldn't be allowed to dictate textbooks, most definitely not. You can't teach creationism. The best antidote to that is actually education. When people are educated they won't believe this sort of thing. The best way to look at it is, as my friend Tapan Raychaudhuri used to say, look at how much imagination there is in the Ramayana and Mahabharat. The best antidote to such rubbish is more education, no matter what the textbooks say. When mind is opened up, you automatically see this is rubbish.
How many marks out of 10 so far to Modi?
I give him 9.
Modi must speak out against Hindu hardliners: Jagdish Bhagwati - The Times of India
