February 16, 2016

The Wrong Priority for India

Vivek Dehejia, Resident Fellow, IDFC Institute, in his article in the Mint, raises the very pertinant question "Is prioritizing the reduction of inequality (however measured) a sensible policy goal for India at present?" He also argues that "A fixation on inequality is sheer folly for an economy in which the problem is poverty, a matter of absolute deprivation"


Excepts from the article can be read below


"Many commentary pieces on the topic have assumed, without argument, that Piketty’s policy prescription, deriving from his analysis of advanced economies, can more or less be transplanted intact to India and other developing and emerging economies. This unstated assumption needs to be questioned and, I would argue, frontally challenged.

It is certainly plausible to argue that, in an advanced economy such as the US, in which the level of per capita income is already high, it is a pressing public policy imperative today to use the panoply of fiscal tools, both on the taxation and on the spending side, to attenuate the high level of income and wealth inequality..."

"But, in my judgement, it would be disastrous for India, which is still a lower-middle-income economy even a quarter century after economic reforms were unleashed, to embrace such an approach. Indeed, such advice, in the Indian context, whether coming from Piketty or any other celebrity economist who pays an obligatory visit to India in the winter, is, I am afraid to say, little more than generic “drive by” punditry. Such advice is easily doled out and cheaply embraced by some of our would-be progressives: cheaply, because they perhaps suspect that the chances of the advice being followed are slim to non-existent."


The entire article can be accessed here



Topic : Transitions / In : OP-EDS
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