New Delhi: Speaking at the launch of a book that appraises the performance of the Narendra Modi-led government at the Centre, Amartya Sen commented that growing inequality in the country was not the only worry. But, a growing acceptability for widespread inequalities was equally problematic.
“There is a kind of tolerance of inequality. It is seen in what is considered acceptable as a means of judging the performance of the economy. If the incomes of a few people rise, that is treated as evidence for the economy doing well. The tolerance for that idea is worrying,” Sen said.
He also compared demonetisation to ‘belief in magic’. “It really boggles the mind as to how one could have come up with that idea to deal with unaccounted for money. It is like blind belief in magic.”
Sen argued that the economy suffered as a whole due to belief in ‘magic’ in addition to standard right-wing economics. He drew a distinction between market economics introduced by Adam Smith’s Wealth of Nations in 1776 and what Sen described as ‘right-wing economics’.
“Adam Smith argued that growth is good because it gives more money in the hands of the people and the government. The people can do with money what they couldn’t without money. The government can do what only the government can do,” Sen said.
‘Right-wing economics’, Sen argued, focuses solely on growth and accumulation of wealth in the hands of the few and the withdrawal of the state from service delivery. “The policies also reflect that,” he said.
Amartya Sen and others at the book launch. Credit: Kabir Agarwal
Critique of Ayushmaan Bharat
Sen pointed to the Centre’ flagship health insurance scheme Ayushmaan Bharat as a case in point. “Ayushmaan is the biggest example of a leap in the wrong direction.”
He elaborated with an example. “Under the scheme, if you are 40 and need an appendix operation and can’t pay for it, you go to a private hospital and the government will pay for it. But, what about the 1, 2 or 3-year-old who has died due to a lack of primary health facilities?”
He argued that instead of focussing on an insurance scheme, the government should have invested in improving the quality of primary health care.
Sen also contended that government funded insurance schemes in healthcare create perverse incentives for private healthcare providers. “It is like an income subsidy for private hospitals. It creates incentives for them to create diseases where none exist,” he said.
The book that he was launching, A Quantum Leap in the Wrong Direction?, includes chapters on the economy, socio-economic indicators and governance written by 14 authors.
Speaking about the book, Rohit Azad, one of its four editors, highlighted two ‘Modi-made disasters’ – demonetisation and implementation of GST – for special focus.
Comparing the pre-demonetisation and post demonetisation data, Azad argued that the GDP growth figure would have been even lower than the 6.8% had it not been for increased government spending post-demonetisation.
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In the quarters since November 2016, India’s GDP growth rate slipped from 7.8% to 6.8% despite world growth heading north from 2.6% to 3.1%. Government spending in India, went up by 5 percentage points after demonetisation.
“In the absence of such expenditure, which partially mitigated the contradictory effects of demonetisation, the economy would have grown even slower than 6.8%,” Azad said.
The book also points to agriculture as a key area where the Centre has failed over the last five years. With decline in agricultural credit, low output prices and declining real rural wages, it notes that the agricultural crisis has worsened under Modi.
Citing The Wire’s reportage on the government’s key intervention in agriculture – Pradhan Mantri Fasal Bima Yojana – the book said, “[I]t is an insurance scheme that ensures corporate profits, but does not offer much to the peasantry in its current form”