Growth rate may come down to 6%, says Sen

Growth rate may come down to 6%, says Sen
The Financial Express, February 24, 2009, Page 2

fe Bureau

KolkataThe growth rate in India could come down to even 6%, said Nobel laureate and noted economist, Amartya Sen, at a lecture organised by Pratichi (India) Trust. “In China and in India, the growth rate has not fallen so much. I think the growth rate will fall a little more, soon. But it won’t go down to around 12% as in Japan ,” he said. “I cannot speculate to what extent growth rates would go down but it could go down to 6%,” Sen said.

He added that raising the internal demand is a way out to tackle the situation, but there are limits to this. “To some extent that’s what is happening. The government was committed towards reducing the fiscal deficit and they have now decided not to do that. That is actually a stimulus package in American terminology,” he said. “Internal demand expansion is a way out. But you know, some sectors like IT and pharmaceuticals are dependent on foreign sales,” Sen added. Sen said India and China are two countries with economies of their own; “almost like a world of their own. India was very isolated (from the world economy earlier); China was very isolated too, but had been much longer in the global frame, so is much more integrated than India is,” he said. Sen added the main crisis has come from the financial sector and the main problem has been, especially for America , the removal of financial control. “But India has not removed (financial control), nor has China . For that, it has not been susceptible to the same type of fragility that affected the American economy and to a slightly lesser extent, the economies in Europe and Japan ,” he said.