‘In 2040, discussions will be about Mumbai consensus’

Laying the ground for US President Barack Obama’s visit to India next month, noted economist and director of the White House National Economic Council, Lawrence Summers underlined the significance of India’s economic strength in the coming decades.

“Perhaps in 2040, discussions will be less about the Washington consensus or the Beijing consensus than about the Mumbai consensus,” he said in Mumbai on Friday.

He added it wouldn’t be based on unregulated capitalism but rather on the “idea of a democratic, developmental state driven not by a mercantilist emphasis on exports but by a people-centric emphasis on growing levels of consumption and a widening middle-class.”

India is expected to overtake Japan in two decades to become the third-largest economy in the world after the US and China. China recently toppled Japan to capture the No.2 spot.

Talking of how the world would look back at India in 2040, Summers said 2010—2020 would be seen as the decade that saw “the emergence of India’s John Harvards, Leland Stanfords and John D Rockefellers” in addition to remarkable universities in the public sector building on the success of the Indian Institutes of Technology and India becoming the world’s leading exporter of medical services.

In response to a question on protectionism, Summers said it was one of the major threats to the global economy and that in the end it serves nobody. “It makes people poorer and nations more hostile toward one another and it reduces opportunities for businesses and workers,” he noted, calling it a negative-sum game.

The former chief economist of the World Bank and president of Harvard University, however, parried queries on the future of the dollar and monetary easing in the US, not wanting to tread on the Federal Reserve’s territory.