It is still not clear whether India did the right thing by not liberalising fast enough and avoiding the financial meltdown of the type we’re seeing in the west. The argument made by experts like Percy Mistry (head of the Mumbai as International Financial Centre report) is that countries doing financial sector liberalisation gain by around 3 percentage points in terms of annual GDP growth. So, if 3 per cent of GDP has to be sacrificed once in a decade to clean up things (Mistry said this in an interaction with a newspaper), there is still a net gain. The final cost of the bailout, of course, will be a lot more than 3 per cent (the US alone will be looking at a cost of around 8-10 per cent, if not more), but the question is whether the gains from liberalisation are more than the losses from not liberalising. This is not a question that too many Business Standard columnists have answered in a straightforward fashion.
Sunjoy Gupta, Mumbai
