Economist Jagdish Bhagwati, a contemporary of Amartya Sen, is ready to be Narendra Modi’s advisor if Modi becomes Prime Minister, which he is well set to be. If Bhagwati assumes the role, he would urge Modi to allow greater foreign investment and trade to spur slow growth and curtail government spending. India is going through its worst slowdown since the 1980s. Bhagwati is likely to be on an external council advising the Prime Minister with his staunch free market thinking. His protégé, Arvind Panagariya, another pro-growth economist is likely to have a more direct role as chief economic advisor to the Prime Minister if Modi is in the hot seat. They are both Columbia University economists.
If the two become Narendra Modi’s economic mentors in Delhi, they will perhaps clash with the protectionist factions in the Bhartiya Janata Party (BJP) and its allies. Bhagwati would like Modi to lift the ban on foreign retail to which the BJP is firmly opposed. He also advocates regional pacts such as the Trans-Pacific Partnership being negotiated between the US and East Asian nations. Besides, he wants RBI governor Raghuram Rajan to be retained to persist with his hawkish use of monetary policy in order to stubbornly target the high inflation in the country and to stop fiscal profligacy. The Gujarati economist is enthusiastic about the Gujarat model for economic development which Modi is pushing for. There is a controversy about whether the Gujarat model is applicable to the whole of India. Some also feel that the success of the Gujarat model is fortuitous, helped by the emergence of two giants like Reliance and Essar. Be that as it may, an economist like Bhagwati applying his mind to Indian economic policy will be a great thing.
