India is an economic superpower but still needs to tackle poverty: Paul Krugman
Paul Krugman said India had to find a way to employ its working-age population and also tackle corruption.india Updated: Mar 17, 2018 21:22 IST
India is an “economic superpower” already but needs to watch out for inequality, unemployment and “so much visible poverty”, economist Paul Krugman, winner of the 2008 Nobel prize, said here on Saturday.
“India is now, adjusted for PPP (purchasing power parity), the world’s third-largest economy. It’s an economic superpower in the normal sense which doesn’t get captured. But it is still poor,” Krugman said at the News18 Rising India Summit. Krugman is at present distinguished professor in the City University of New York. The concern is whether India can crawl out of the so-called “middle-income trap”, he said. “It’s a privilege to be able to talk of it because it takes a lot of work to get there (middle-income level). But we see that developing countries can’t close that last gap to reach the level (of development) of western Europe.”
Artificial intelligence poses a threat to globalisation, therefore, to India, he said. “For instance, the interpretation of medical data. Now, that can either be outsourced to India or to the cyberspace. So, some of these opportunities will be foreclosed by artificial intelligence,” he said.
The country had to find a way to employ its large working-age population and also tackle corruption. “You can’t be Denmark with Chinese levels of corruption.” As it rises up the ladder, India will need more credible institutions, he said.
The economist identified himself on the centre-left side of the equation, but said he didn’t believe the “government should have a heavy hand on the economy”. “What is the incredible story about India in global economic history? It’s the trebling of GDP per capita that’s transformational. That still 12% of the US’s level, India is still poor but it’s not at that level it used to be.”
Krugman then turned to what caused India to leap and if the country could continue growing.
“Clearly, the dramatic change in policy and exports,” he said, answering the first question of the two questions he posed. “The country reduced tariffs…and also a great of liberalisation within the domestic economy.” He said the country should also diversify its manufacturing sector to keep growing.