Nobel Prize winning economist Joseph Stiglitz on Tuesday called India the “poster child of what not to do” during a session with Indian business leaders and economists. He said the country had not done well in handling the COVID-19 pandemic.
The interaction was organised by the Federation of Indian Chambers of Commerce & Industry’s (Ficci) West Bengal state council and moderated by its chairman Rudra Chatterjee.
Stiglitz is a professor at Columbia University and had been chief economist at the World Bank from 1997-2000.
Here’s what he said on what India had gotten wrong and what it needed to do:
Lockdown
Stiglitz criticised how India implemented the lockdown, saying the ensuing migrant crisis exacerbated the pandemic in the country.
“It (India) picked up one idea that is important. Lockdown. Did not think about what it means in a poor country. How are people going to live, large number of people moving across the country. One could not have imagined anything worse for spreading the disease,” he said.
Politics of division
On bringing back prosperity after the pandemic, Stiglitz said: “...if I were to say where to begin, I would say the politics of division, get rid of that.”
He said the pandemic had proven one that “you need politics of solidarity”. According to him, “tolerance” has been one of the cornerstones of India’s economic successes.
“I will start by trying to create an inclusive society. Politics of division is an antithesis of what needs to be done. Modi has tried to divide your country, Muslims against Hindus, and that is going to undermine your society and economy no matter what else happens. This fundamental division will weaken India forever,” he said, The Telegraph quoted.
Stiglitz also said “no country can be fully self reliant” in the current global order where raw materials or technology are often imported.
During lockdown and in his Independence Day speech, PM Narendra Modi had made a pitch for self reliance, saying it was the need of the hour.
Stiglitz said such a move was out of touch with the 21st century and is something one would expect from authoritarian regimes, according to The BusinessLine.
Taxes
Stiglitz called for increased taxes on the rich to raise resources for the country.
“If you can’t get resources, one way of dealing with it is, raise taxes on the very rich – you have a lot of billionaires in India — and if you spend that money well, it actually stimulates the economy,” he said.
Spend money
“The first priority is to help the vulnerable but also contain the disease. Spending the money in a way that prevents contagion and also helps people gives double dividends. Let me say very clearly, you can not control the economic aftermath if you cannot control the pandemic,” Stiglitz said, The Telegraph quoted.
Stiglitz said the United States and India could basically print money. “We are not inflicting any inflationary pressures and a case for spending money is compelling. If we don’t, there will be long-term damage. Companies that go bankrupt don’t go un-bankrupt in two years’ time,” he said, according to The Business Standard.
The economist said money needed to be targeted to the right places. “Some spending gives a big bang for the buck and others that don’t. By shifting money from those areas to areas where impact is high, you can maximise the effect even within budgetary constraints,” he said.