ET GBS: Strategy-oriented growth will lift millions out of poverty, says Jagdish Bhagwati

NEW DELHI: Strategy-oriented growth that will help generate revenue to spend on social sectors, which in turn will lift millions of people out of poverty— that’s Jagdish Bhagwati's prescription for the Narendra Modi government.

“Growth is a strategic instrument that pulls up people into gainful employment. It generates revenue that helps government spend on social activities,” Bhagwati said at the Economic Times Global Business Summit on Saturday, laying down the roadmap to effective governance.

The India-born Bhagwati is currently professor of economics and law at Columbia University. Bhagwati said that poverty requires intervention beyond growth. “However, I don't think giving subsidies is a good idea,” he said, something that Modi had spoken about at the inauguration of the summit. Modi said he believed in subsidies for the poor as well as the need to ensure zero leakage in such programmes.

It’s practical for the state to walk on two legs, accumulate wealth and spend it on improving the social sector, said Bhagwati, who is all praise for the Gujarat model of development under Modi, previously chief minister of the state. “UPA-II (the United Progressive Alliance government of 2009-14) completely lost sight of this. They kept spending more, as a result of which it crashed,” he said, adding that corporate social responsibility (CSR) norms make it imperative that governments need to ensure they earn profits. Loss-making companies don’t need to spend on CSR activities.

While praising the Modi government's IT initiatives and focus on empowering women, Bhagwati cautioned it on trade issues related to outsourcing between India and the US.

His advice comes just days ahead of President Barack Obama’s visit to India for the Republic Day parade on January 26.“Instead of being goody to Obama, the government needs to ask him for an executive action on outsourcing because unless we ask we will not get it, since the American economy is driven by lobbyists,” he said, referring to the issue raised by various US presidents in the past.“When the Modi government is working towards skilling Indians, the US approach towards outsourcing jobs to India spread a continuous sentiment against India,” he added.