LAST UPDATED: March 16, 2021, 4:53 p.m.
New Delhi: Nobel Prize-winning economist Paul Krugman on Monday said that a country like India should not go back to the license raj regime and must have a deliberate policy for frosting industries.
Addressing a virtual event organized at the Ashoka University, Paul Krugman said that the issue of income inequality in India is a severe one.
“Don’t go back (to) Licence Raj regime… countries Like India might want to have a deliberate policy for fostering industries,” he said.
With the introduction of the Liberalisation Policy in 1991, the License Raj, which involved an elaborate system of licenses and regulations that were required to run the businesses in India has been dismantled.
Replying to the question, why India is not best suited for labour intensive industries, the Nobel Prize winning economist replied, “India is not well suited as other players are to produce labour intensive manufacturing products.”
“Internal geography (of India) may be one of the reasons…Indian do have a kind of non-industrial ecology,” the eminent economist noted.
He further claimed that India does not have a great infrastructure which can become an obstacle in future. He said that the country has been very successful in the service sector and high skill manufacturing.
“Services sector generates a lot of GDP, but they do not generate a lot of jobs,” he opined.
He said that he is an optimist when it comes to export-oriented growth for developing countries. Even after the slowing down of the globalization process, India has been very successful with the service sector and high skill manufacturing.
“Income inequality issue is a severe one in India. If the USA has an extremely hard time tackling extreme inequality, then I got to worry about India,” he observed.