 "Kaushik Basu bats for a tolerant India")
Delivering a lecture after receiving the first A L Nagar Award here, Basu also said corruption in India was large and needed to be arrested, as it eats into the very fabric of society and also affects growth in the long run. Nagar was a renowned econometrician.
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The government's former chief economic adviser said while the world had become globalised in movement of goods and capital, different money creating authorities had unleashed tension. It is here that India needed to play a leader's and intellectual's role in reviving world growth.
“India is a strong country, a powerful country. We can be in the leadership of ideas, and these at one level go back to our own roots of love, tolerance, accepting all kinds of people,” he said.
Section 377 of the penal code that bars homsexuality ought to be revoked, he felt. “You don't have to agitate for this but you have to speak out for this because you want India again to be a vibrant, inclusive society.”
What is the connection of an inclusive society to economic growth? Posing the query, Basu said even if there was no connection, these values needed to be pursued, as economic growth is not everything in life. “In a mature society, you want art, culture, pure mathematics, which might have no (apparently) applied use, to flourish.”
However, he added, there is in fact a connection of these values with economic growth in the long run. “It is not like fiscal policy, monetary policy — these things don't affect immediately. But, in the long run, this tolerance where each one feels they are part of society, no matter what they are like, makes them participate in society better, makes them be more productive. That, in turn contributes in a huge way to making a country powerful and a strong economy.”
Basu, however, did not directly refer to the present debate in the country on intolerance.
On corruption in India, “we don’t have hard data (but) it is still very large”. With the economy growing well, some might say corruption does not matter but it does, eating into the fabric, morality, of society. “Whether or not it is good for growth, it is something dreadful. You must not have, there must not be tolerance for corruption.”
And, this ailment can reach a critical level when something dreadful happens to the economy. “We are seeing it in respect of Brazil. Corruption (there) has reached a huge proportion and the economy has come to a grinding halt,” he noted of the controversy there that has engulfed top figures in the executive and the legislature. People are now scared to invest money in any company there, worried that if a charge comes up against the firm and inquiry starts, your money will be frozen.
He cited his own earlier thesis when the government’s CEA, of amending the Prevention of Corruption Act. Adding, in the context of the controversy and criticism that had evoked, that universities are a place where you bring new ideas to the table, discuss them, churn them out. You (eventually) accept some, you don’t accept some.
He said the global economy was going through a very difficult phase. “European growth is barely positive, Japanese growth is barely positive. Brazil, Russia is negative. The United States is growing moderately for a rich country, much less than India.”
“India is now a prominent country in the world. We no longer need to feel ashamed of ourselves. What we do in monetary policy, fiscal policy, there are global implications in the world today.”
Adding that in today's globalised world, for a whole host of policies, we all need to work together.
In the 17th century, it was decided in England that one space where competition is not good is a money creating authority. You want several banks to be creating their own money and putting these in the market. The same problem is arising today.
“You may have many countries but goods flow easily in and out of countries, capital flows in and out.” However, since there is a central bank for each country, what is happening in effect is we are going back to the 17th century — one economy, with many money creating authorities.
"This is creating huge tensions in the world; global policy making is a very big challenge. In this kind of area, where India has a seat, we are in G-20, India has to play this role ever more," Basu said.