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Indian economy a 'success story', say US experts
By siliconindia
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Tuesday, 02 December 2003, 20:30 IST
WASHINGTON: Indian economy is a "success story", four well-known US-based economists say, but differ on whether reforms were responsible for India's higher growth rates in recent years.
Economists Bradford DeLong and Dani Rodrik say, according to a Survey published by the International Monetary Fund (IMF), that reforms cannot be credited with India's higher growth rates in recent years because the shift in the growth rate preceded the reforms of the 1990s.
Joseph Stiglitz, former vice president and chief economist of the World Bank who was among the first to challenge the "Washington Consensus," by which the World Bank, IMF and the US Treasury would argue that liberalisation was the key to economic progress, went further.
He contended that India is one of the two most impressive economies today, the other being China, and that India also, like China, has bought the least into the "globalisation story that the IMF and others were selling."
Resident scholar in the Trade Unit of the IMF Research Department and professor of economics at University of Maryland Arvind Panagariya said India is where it is and avoided pitfalls because it adopted gradual liberalisation.
Panagariya argued that India's growth in the 1980s was unsustainable and fragile. It was the more systematic reforms of the 1990s, he said, that produced decidedly more stable and sustainable growth from 1992 on.
Panagariya said that the reforms were gradual and avoided the shock therapy advocated by some, but this is to be attributed not so much to conscious choice as to the intricate demands of the country's domestic political process.
In one area, capital account convertibility, he pointed out, India has deliberately chosen to go slowly, but this delay is hardly inconsistent with its embrace of pro-market and pro-globalisation policies in other areas.
Indeed, he said, many pro-globalisation and pro-reform economists have explicitly advocated such a delay.
Despite numerous hiccups, Panagariya agreed with the other economists, India's progress, especially its dynamism in the information technology sector, augers well for its long-term prospects.