‘Financial crises in US, UK result of excess deregulation’
‘Indian corporates now open to exploit synergies abroad’
HYDERABAD: Indian economy can achieve a growth trend of 12 per cent given its competitiveness, high savings rate, and high proportion of young population, provided it undertakes reforms in labour laws and higher education, said Arvind Panagariya, professor of Economics, at Columbia University, on Thursday. Speaking at the ‘Distinguished Lectures’ series organised by the Economics Department of the University of Hyderabad (UoH), said poverty reduction would have been much more rapid if the share of industry in GDP grew quickly.
Although inequality grew in the post-reform period, Mr. Panagariya said other mechanisms such as internal migration, remittances and ‘inspirational effect’ would work to reduce it over time.
Former RBI Governor Y.V. Reddy, who is currently with the UoH, said every deregulation measure could not be termed ‘reform’. “Direction, sequence and pace of reforms,” should be taken into account. The financial crises in US and UK are the effects of excessive deregulation. However, “in the macroeconomic sense, India needed a lot more deregulation, especially in the financial sector.”
On the recent spate of acquisitions abroad by Indian corporates, Mr. Reddy said, their contribution was qualitatively higher because India traditionally was not export-oriented and so started with less domain knowledge. This experience opened up new vistas to exploit synergies, for instance, between the domestic techno-managerial expertise and Africa’s resources.