Nobel laureate Paul Krugman warns against India's unemployment
17 Mar 2018
US nobel laureate Paul Krugman, who won the Nobel Prize for economics in 2008, says India could end up with huge mass unemployment if it failed to expand its manufacturing sector.
Krugman was previously a professor of economics at MIT, and later at Princeton University. He retired from Princeton in June 2015, and holds the title of professor emeritus there. He also holds the title of Centenary Professor at the London School of Economics.
He said at a summit organised by News18, India should be wary of artificial intelligence as in future, though 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 while speaking at at a News 18 event.
He higlighted the fact that Japan was no longer a superpower because its working-age population had declined, "and China is looking the same."
Krugman said in Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one.
Krugman said India's growth story would continue to improve at a higher rate. "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."
India’s weakness in the manufacturing sector could work against it, as it doesn't have the jobs essential to sustain the projected growth in demography.
"You have to find jobs for people,” he emphasised.
Sounding a note of optimism, Krugman said India can also ride the next wave of globalisation on its demographic dividend.
"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," he said.
India's growth story though incredible never got the attention it deserved because China hogged the world's attention, Krugman said.
"The rest of the 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."
He said 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."