Amartya Sen, Nobel laureate and economist, speaks to UTVi on the global economic crisis. Excerpts:
In a country like India where we seemed to have held off some of the worst effects of the financial downturn, questions will be asked whether we should open up, liberalise?
I am unhappy with the slow progress in dealing with the crisis in America, and in Europe to a lesser extent. The two reasons why the markets are not opening up despite the massive cash injection and the promises made are, one, a genuine fear, because when the regulations were taken away, especially from the insurance sector, more than a trillion dollars of credit defaults happened, plaguing the banking systems. Two, the good banker does not know a good asset mix, since they are not quite clear yet as to how much the credit defaults were.
On top of that, there is a tremendous air of pessimism and Obama has not been able to lift it. This combination is keeping the credit market frozen. If you look at India, we escaped partly because we did not deregulate and the level of pessimism is also less, partly because the Indian economy has become independent and not just export-oriented.
In America, the crisis has hit the national health services very badly, because nothing is going to work until the vulnerability of the sick or potentially sick is taken away and the high cost of business is taken away.
Are you looking at some of the debates taking place in the US any differently or are you convinced that except for the strengthening of institutions, there is not much to worry about and we have recovered from the worst?
There is lot to be done and this is an opportunity to make some real changes and we all believe that a universal healthcare system has to be provided. Obama’s success will depend upon two things, whether he can pull the economy (up) in time and whether he does what he promised to universalise healthcare. Already his popularity has fallen and I think he has to go on the economy much faster and the medical problems that he has to deal with. He has become too dependent on the Congress (legislature) but he has the stature to try to put together a combination which would work, and which would be in line with what he has promised.
