“Don’t go back (to) Licence Raj regime… country Like India might want to have a deliberate policy for fostering industries…” Guess who said this? It is said by the Nobel prize-winning economist Paul Krugman. He said this while addressing a virtual event organised by Ashoka University. Krugman also stressed that the income inequality issue is severe in India.
The licence raj was dismantled with the liberalisation policy introduced in 1991 as it involved an elaborate system of licences and regulations that were required to set up and run businesses in the country. Krugman further said that 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” he told. He pointed out the fact that country does not have a great transport infrastructure which in a way will pose problems.
Krugman noted that India has not really done well in the labour-intensive aspects whereas he said that the country is a great 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. 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 said.
Krugman won the Nobel Prize in economics for his work on international trade theory in the year 2008 .