New Delhi: Commenting on country’s elaborate system of licences and regulations, the Nobel prize-winning economist Paul Krugman on Monday said that India should not go back to the ‘licence raj’ regime and the country should have a deliberate policy for fostering industries.
Addressing a virtual event organised by Ashoka University, Krugman further said, “Don’t go back (to) Licence Raj regime… country Like India might want to have a deliberate policy for fostering industries.”
The licence raj, which involved an elaborate system of licences and regulations that were required to set up and run businesses in the country, was dismantled with the liberalisation policy introduced in 1991.
The world famous economist also showed concerns over the income inequality issue in India. Replying to a question on why India is not well in labour-intensive industries, Krugman said India is not as well suited as some other players are to produce labour-intensive manufacturing products.
“Internal geography (of India) may be one of the reason…Indian does have a kind of non-industrial ecology,” the eminent economist noted.
He further talked about faulty and inadequate transportation infrastructure saying that India does not have a great transport infrastructure and that is going to pose some problems.
However, Krugman criticised country’s labour-intensive aspects, but he lauded country’s success in the services sector and high skill manufacturing.
“Services sector generates a lot of GDP, but they do not generate a lot of jobs,” he opined.
He further said that he is an optimist about export-oriented growth for developing countries even as the process of globalisation is slowing down. “Income inequality issue is a severe one in India. If the USA has an extremely hard time to tackle extreme inequality, then I got to worry about India,” he observed.
In 2008, Mr Krugman, an American economist, won the Nobel Prize in the field of economics for his groundbreaking work on international trade theory.