Doctor gets a reality check from old friend Dr Jagdish Bhagwati

Anyway, novelists spout fiction, he said as he dismissed India’s most high-profile critic of globalisation.

Then, he turned his attention to his friend, the Prime Minister, and another man sitting in the audience whom he singled out by name: Arun Shourie.

Singh and Shourie, both economists by training and reformists by reputation had, as students, authored two of the finest dissertations on foreign trade that he had read, said an expansive Bhagwati.

Since Shourie’s party had lost the election, political pundits had conjectured that the path of reform did it in. Bhagwati dismantled that notion while acknowledging that the growth that came with reforms would pose its own brand of problems to politicians.

Expectations had risen, he said, and people either wanted more or were aware that others were getting what they were not. “If the Prime Minister does not deliver by accentuating the reforms, he too, will be bundled out,” said the candid economist.

A few minutes earlier, Singh had released a postal stamp in the honour of Walchand Hirachand, a pioneer industrialist who launched shipping and the aircraft industry in India and carried within him a sense of adventure that took enterprise beyond a mere numbers’ game.

Obviously inspired by the man’s example, Singh called on state governments to encourage private entrepreneurship. Bhagwati, while respecting his friend’s intentions and high station (he repeatedly referred to him as ‘‘Prime Minister’’) clinically touched on the government’s problem areas:

• “(Planning Commission chief) Montek says we can raise growth from 5.5 per cent to 7 per cent just by improving infrastructure,” said Bhagwati. But this plan would stall unless labour reforms were introduced.

“If you can’t run infrastructure efficiently, you will need even more investment in infrastructure.”

• Government expenditure and deficits bothered him, he said. “The first tendency when you are elected on a pro-poor platform is to spend more. That could be a problem the PM will have to face.” He said budget deficits would raise prices, hurt the poor and the government might then spend even more to cushion them.

• Privatisation had definitely suffered, said Bhagwati. He said he had nothing ideological against the public sector but the fact was that it did not work. Worse still, its inefficiency kept getting subsidised while the poor suffered the brunt of bad bus service and power cuts. Having described his own journey from a poor university lecturer who travelled three hours a day by bus in Delhi to where he now stood, Bhagwati pointedly said: “People like us can afford generators, but the poor cannot.”

For Singh, the occasion was a moment to underline the crying need for entrepreneurship and break from the past. ‘‘There is no doubt India requires greater public investment, but it also needs more entrepreneurs. Chief Ministers should pay more attention to needs of their local entrepreneurs, particularly those of the less developed states.’’

While he admitted that the Government ‘‘must not do anything to stifle the creative impulse and animal spirit of enterprise,’’ he said it was, ultimately, up to industry itself to ‘‘find full and free expression.’’

‘‘The past is not a good model as far as future investment opportunities are concerned,’’ the Prime Minister said, despite ‘‘examples like Venu Srinivasan, Anji Reddy, Ranbaxy, Narayanamurthy and Azim Premji..’’

Foreign trade, a subject both Singh and Bhagwati have tracked over the decades, was another key theme of the Prime Minister’s remarks. And he used the Walchand occasion to stress how little had been done since his days.

‘‘We have failed to build on our historic foundations in maritime development. There has been a neglect of ship-building. There has been a neglect of ports. And above all, a neglect of foreign trade. We don’t lag behind just Japan, but Korea too.’’

‘‘Given the obsession with looking internally,’’ Singh said, ‘‘our policy did neglect the external dimension of our trade for far too long. But today, there is a mass conviction that this (foreign trade) is the direction in which to go. We can now accelerate trading in both manufacturing and services more extensively, both with colonies of Asean region and with East Asia.’’