Demonetisation will promote growth while Amartya Sen and other experts who denounced it stand “humiliated and exposed”, said Jagdish Bhagwati, Professor of Economics, Law and International Relations at Columbia University.
“On the effects of demonetisation on growth, I should say that I was the one economist who had argued (with my co-authors), from first principles, that demonetisation would increase, not diminish, growth,” he said.
“And that is exactly what appears to have happened,” he said further.
“The Prime Minister’s success in Uttar Pradesh has therefore meant that Amartya Sen and his friends who argued that demonetisation would hurt growth, have been humiliated and exposed as much as the Congress,” Bhagwati told PTI in an email interview.
“After BJP’s victory in Uttar Pradesh, indeed Prime Minister Narendra Modi is now in an even stronger position than when he was first elected resoundingly,” Bhagwati said.
He also said that three things ought to be noted that made (Prime Minister Narendra Modi’s) current position ‘unassailable’.
“First, he has finally decimated the Gandhi-Nehru dynasty, so the Congress is not merely on the ropes; they also lack currently anyone of stature who can rescue it from oblivion,” he said.
Second, the Muslim vote no longer is a monolithic anti-BJP vote, Bhagwati said, adding, “I suppose that while BJP did not field Muslim candidates in the Uttar Pradesh election, surely Muslims were aware that the propaganda that Prime Minister Modi was anti-Muslim was an outrageous lie.”
Noting that Modi has appointed a brilliant Muslim, ambassador Syed Akbaruddin to the United Nations as our representative, India’s best journalist MJ Akbar is in his team also, and the new ambassador to the United States is a Sikh of great distinction, Bhagwati said, “India’s diversity is thus manifest in Prime Minister Modi’s approach to governance.”
Referring to Nobel Laureate Amartya Sen’s assertion that demonetisation was a ‘despotic act’, the eminent economist said, “Not knowing finance, he (Amartya Sen) made the mistake of taking the strange position that the demonetisation action was ‘despotic’.”
“But Sen seemed eager to rush quickly into the fray: here perhaps was his chance to ‘get’ at the Prime Minister, whom he had long denounced but without success,” he said.
“Like Sen, I was also not an expert on finance but I had taken my time and educated myself and I paired myself with finance experts so I would not make a fool of myself.”
“Unfortunately, with Sen and me on opposite sides on the demonetisation issue, many in the press seemed to seize on this coincidence and try a repeat of the old controversy, they had conjured up between Sen and me over the issue of the efficacy of growth in reducing poverty,” Bhagwati said.
“He (Sen) had lost that time around, flipping from a ‘growth does not matter’ to ‘I always argued for growth’ position,” the eminent economist said, adding, “Here was his chance to get both me and the Prime Minister, a double dividend.”