India as a democracy better placed than EU: Panagariya

He said even as a single monetary union there are fears that Greece followed by Spain might drop out of EU

Comparing diversity issues in India and the European Union (EU), Niti Aayog Vice-Chairman Arvind Panagariya on Saturday said the world’s largest democracy is better placed as a cohesive unit than EU and is bound to see high growth rates in the coming decades.

Replying to a question on India often being called a “noisy democracy” at an industry body Confederation of Indian Industry (CII) event here, the noted economist said India despite its huge diversity and varied traditions and cultures, has stayed as a single cohesive unit. Quoting economist Jagdish Bhagwati, Panagariya said that Bhagwati told Singapore’s first Prime Minister Lee Kuan Yew, in response to his comment on India being a noisy democracy, that “you hear the noise, I hear the music”.
 

“This says it all. Just think about it, Europeans, with far less diversity than India, today are still struggling to become a single state. The movement towards a single Europe is ridden with so many difficulties. “Even as a single monetary union, there are fears that Greece might drop out of this union and tomorrow Spain might drop out of this union," he said. He added that quite contrary to that, with much greater diversity in India, the country has stayed as a single nation. “And, not only have we stayed together, but the nation has grown over time. Because in today’s noise, we tend to forget that in 1950s and 1960s, there were so many separatist movements based on language, etc,” he noted.

On the way ahead, he said: “In the long run, we will see our growth rate in the next 15-30 years return to eight-10 per cent.”

In earlier success stories of Singapore, Taiwan, South Korea and China, most recently, growth happened through rapid growth of labour-intensive industry, which created a lot of jobs and then that was led by growth in services sector. “What we need to do is make the ecosystem better for the labour-intensive industry so that our industrialists can see what can be done through people and what can be done through machines...,” he added.

Panagariya stressed that the thrust should not just be on increasing the use of machines, but for the industry to find the right mix so that the growth can be evenly spread.

On India's growth potential, he said the scope is "enormous".