Top economist Jagdish Bhagwati eyes role in 'Narendra Modi government' in India

Apr 25 2014, 16:18 IST
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To enhance growth, Narendra Modi will need to promise that India will open more to trade: Jagdish Bhagwati. To enhance growth, Narendra Modi will need to promise that India will open more to trade: Jagdish Bhagwati.
SummaryNarendra Modi will need to promise that India will open more to trade: Jagdish Bhagwati.

An eminent Indian-born economist positioning himself to advise Narendra Modi if the opposition leader becomes India's next prime minister would urge him to allow more foreign investment and trade to spur slow growth and curtail government spending.

Modi is favourite to become prime minister for the Hindu nationalist Bharatiya Janata Party (BJP), which has a strong lead in opinion polls. He is running on a platform of reviving an economy going through its worst slowdown since the 1980s.

For the first time addressing his potential role in a Modi government, Jagdish Bhagwati, known as the most famous living economist never to win a Nobel prize, told Reuters he saw himself on an external council advising the prime minister.

"I'd be glad to chair something like that, and I think that's what they might do," Bhagwati said.

In a possible sign of the influence of Bhagwati's brand of free-market thinking, he said his pro-growth protege Arvind Panagariya was a strong candidate for the more hands-on role of chief economist to the prime minister, if Modi is elected.

"The kind of person they would want, and I think correctly, as a chief economist would be my co-author, who is about 60 compared to my 80. I don't have that kind of energy any more," Bhagwati said, adding that people close to Modi had approached him to ask about Panagariya's suitability for the role.

A BJP spokeswoman said she was not aware of any plans to invite Bhagwati and Panagariya to advise.

If the two Columbia University economists did end up working for Modi, it could put them at odds with more protectionist factions in the party and its allies.

"To enhance growth, he will need to promise that India will open more to trade and FDI (foreign direct investment)," said Bhagwati.

FOREIGN RETAILERS HAMPERED

Bhagwati urged the next government to position India as a trading power, seeking to enter, on its own terms, regional pacts such as the Trans-Pacific Partnership being negotiated between the United States and East Asian nations.

He also expected Modi to move decisively to attract foreign investment, and that he would eventually implement a policy opposed by his party - to allow foreign retailers like Wal-Mart and Tesco free access to Indian markets.

"He will do it, but he can't do it right away, because you can't go against your party. It's impossible, he is not a stupid man," he said, adding that Modi's room for manoeuvre would depend

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