Indian economy is doing well: Joseph Stiglitz

This article was last updated on April 16, 2022

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Noted economist, Joseph Stiglitz on Wednesday has commended Indian economy’s performance, saying the country had been doing a good job when institutions in the U.S. and several other countries hesitated “India is doing a good job and has been pursuing a unbiased and cautious policy,” Stiglitz said.

Nobel Prize winner in economics in 2001, Stiglitz, who was delivering a lecture in the Indian Statistical Institute (ISI) here,has stated that the government needed to play an important role ‘in any economy correcting all-encompassing market failures’.

“If India administers its policy well and also guards itself against the out blown financial sector, then the country will be able to manage growth on the face of a global slowdown,” Stiglitz said. Referring to the recession of 2008, he said that it showed the erroneous belief of the proposal that markets were efficient and stable.

He has told that the crisis has revealed the dearth of the U.S. central bank and regulatory institutions. “Countries without independent central banks performed better in the crisis,” he said.

Stiglitz, a professor at the Columbia University in the U.S., has said, “Our institutions were bad. The central bank in U.S. was an embarrassment,” he has said in connection with the global recession which had originated in the U.S.

He has told that there was a need for the government and the markets to play a balanced role in development. He has said that a major failure on the part of governments was not to hold back the markets. “There was a large problem of corporate supremacy,” he said. Stiglitz has said that one of the roles of the government was to pin down excesses of the markets.

In this regard he admired governments in East Asia which played an important role in restraining the market excesses. Saying that there was a need to think beyond the GDP, he said, “GDP is not a good measure. Development has to be comprehensive, sustainable and democratic and should focus on increasing the well being of all.”

He has said that Bhutan was following a better policy in pursuing Gross National Happiness as an alternative parameter of development than GDP. “Even the planning commission of Bhutan is termed as Gross National Happiness Commission,” he observed. In case of market failures, Stiglitz has said it would be most favorable to impose some subsidies even if taxes were distortionary.

He has also dispersed the notion that trade liberalization often led to increased growth. Research had publicized that share of the least developing countries in world trade had been actually declining, he said.

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