Paul Krugman says lack of jobs may hit India's rapid economic growth

Nobel Laureate Paul Krugman has praised India's economic growth saying the country made rapid economic progress during the last 30 years but warned lack of jobs and slowing manufacturing sector could derail the growth story of the world's fastest growing economy. In Q3 of the current fiscal, India regained the world's fastest growing major economy tag with the GDP at 7.2 per cent, compared to China's 6.8 per cent. The GDP figure for the December quarter beat estimates in the range of 6.5 to 6.9 percent.

"India achieved as much economic progress in the (last) 30 years as the Great Britain did in 150 years. It is a very rapid space of transformation....why does there still seem to be visible poverty in India?," Krugman said on Saturday addressing the summit of a media group in New Delhi.

"Lack of manufacturing could be a major hurdle as India doesn't have the jobs," he said.

Another concern for India is high economic inequality, amid rapid economic progress, resulting in uneven distribution of wealth, according to Krugman.

Terming India's economic growth progress as "extraordinary", the economist said the country has become (on purchasing power) the world's largest economy overtaking Japan and while being behind the US and China, it is far bigger than any European country.

Attributing factors that played a role in the economic "progress", Krugman said there was a dramatic change in India's policy including liberalised policies taken in early 1990s.

"I am on the Centre-Left, but I do not think the government should have a heavy hand on economy. India used to have Licence Raj, where bureaucratic obstacles were immense and that has not gone away completely but enormously reduced. India has become a much easier place to do business that it was. The PM said India moved from 148 to 100 in the rankings. That is not a badge of distinction, but it is better than it was," he observed.

He also touched upon the problem of corruption that the country has been facing.

"There are issues of corruption. You cannot become Denmark with Chinese levels of corruption," he added.

Krugman received the Nobel Memorial Prize in Economic Sciences for 2008, honouring his work in international trade patterns. He is the professor of economics and international affairs at Princeton University, Centenary Professor at the London School of Economics.