Nobel Laureate Paul Krugman on Saturday said Indian economy's growth story could be derailed by the problem of unemployment.
Nobel Laureate Paul Krugman on Saturday said Indian economy's growth story could be derailed by the problem of unemployment.
He, however, praised the country's growth and improvement and the quality of doing business in India but also expressed concerns over unemployment, inequality and corruption.
“Lack of manufacturing could be a major hurdle as India doesn’t have the jobs,” he said.
Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one,” he said.
He said that in India ease of doing business has improved a lot. India can also ride the next wave of globalisation on its demographic dividend. "India's growth story is quite unique. Services propelling growth to an extent that hasn't been seen anywhere else in the world and the possibilities of service globalisation has only just begun. Globalisation of service trade has a huge potential. That's one reason to be especially hopeful of India’s progress. It has the first-mover's advantage here," he said.
“There has been a real transformation.”
“I am on the Centre-Left, but I do not think the government should have a heavy hand on the economy. India used to have Licence Raj, where bureaucratic obstacles were immense. That has not gone away completely but has been enormously reduced,” he said.
"India achieved as much economic progress in the (last) 30 years as the Great Britain did in 150 years. It is a very rapid space of transformation...why does there still seem to be visible poverty in India?", he said.
Terming India's economic growth progress as "extraordinary", he said the country has become (on purchasing power) the world`s largest economy overtaking Japan and while being behind the US and China, it is far bigger than any European country.
Paul Krugman who won a Nobel Prize in 2008, was also optimistic about India for having first mover's advantage in terms of globalisation of services.
According to him, the country's growth story has been extra ordinary but he also warned against the level of corruption.
He said, "There are issues of corruption. You cannot become Denmark with Chinese levels of corruption".
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 "Indian economy's growth may derail due to unemployment, says Nobel Laureate Paul Krugman")
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