New Delhi: India has achieved as much economic progress in 30 years as Britain did in 150 years, said Nobel laureate Paul Krugman said at News18 Rising India Summit on Saturday.
The economist further said that there were some very good reasons to be hopeful about India's economic progress at the world stage and equally serious causes for its decline. “The gap between India and world's big economies grew after independence. In the 80s, the whole pattern of world development changed in to two patterns. Globalisation became the great leap forward and long periods of growing trade meant not only growth in volume but also character," he said.
The Nobel laureate went on to state that it was perhaps because of its neighbour — China — that India wasn't being recognised in the manner it should have been.
"Rest of world is not paying as much attention to India as it should. If China wasn't around, we would have said what an incredible story India is. Quadrupling of GDP per capita in a very short time, becoming a better place to do business etc."
Krugman went on to state the reasons why India's growth story would continue to improve, perhaps at a higher rate in future.
"First is that India's working age population is projected to grow substantially. Countries across the world from Japan to Italy to China are suffering or are about to suffer from lack of manpower to propel their growth."
The second reason he cited was that there were still huge parts of India that had yet to realise their full potential. "Prime Minister Modi talked about bringing electricity to parts of India that have never seen it. When such a plan is fulfilled you obviously will see a huge boost to your economy."
The third reason for a bright Indian financial future he said lay in the very character of the country's economy. "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."
But within the prospect of service globalisation also lay the possible pitfalls for the economy, Krugman said.
"There is this concept called artificial intelligence that you should be wary of. In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector," Krugman said.
The other big cause of worry could be a financial concept called the ‘middle income trap’.
"This basically means that once India achieved a standard of growth, for its masses it could get stuck there for a long time. Since India has achieved a great level of progress lately it has exposed itself to such problems that only the more mature economies were exposed to."
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