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Chairman, Economic Advisory Council to the Prime Minister and Chairman of the Madras School of Economics, C. Rangarajan (right), honouring Director of Business Management Economics Program, University of California, Santa Cruz, Nirvikar Singh, in Chennai on Friday.
CHENNAI: The merits of government ownership of financial sector institutions as a check on globally influenced financial crises are currently being overblown, Nirvikar Singh, director, Business Management Economics Program, University of California, Santa Cruz, said on Friday.
“Good rules, regulations and enforcement can all operate without government ownership,” he said, adding that it would be a shame if wrong lessons were drawn from the current financial crisis. Pre-crisis articulations by policymakers of the financial sector were a welcome departure from the classic Indian suspicion of merchants, traders and other intermediaries that persisted in earlier post-Independence India.
At the third SAGE-Madras School of Economics Endowment lecture here, Professor Singh traced the growth of India from a “wounded civilization to emerging giant.”
While India was the first “non-Western” colony to gain independence, and there were high expectations that it would be a role model for economic development in a post-colonial world, nothing of the sort happened.
India’s growth, while much better than what it had had in prior history, was nothing compared to that of Japan and South Korea and of other nations that had been colonies. “To understand why India now has a chance at a different future, we must turn attention to economic policy.”
While nurturing a vibrant democracy, India had, however, failed to take the lead in economic development, due to a variety of factors.
However, it could be noted that policy changes began to occur haltingly and incompletely in the 1980s and effectively in 1991 when India faced a balance of payments crisis.
Since then, an agenda for tax reforms was laid out and an independent and consistent monetary policy followed. Another palpable aspect to what caused the change in India’s fortunes was the world-class performance of the country in the software industry.
C. Rangarajan, chairman, MSE and the Prime Minister’s Economic Advisory Council, said India could not become a strong power unless the economy was put in proper shape. The country had shown potential to grow at 9 per cent and this must be realised.
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