Adverse US impact on Indian outsourcing not for long: Amartya Sen
New Delhi, August 19, 2008 (IANS)

India's booming outsourcing industry may be hit due to the slowdown of the US economy, but not for long since the recession itself may not last more than two-three years, says Nobel laureate Amartya Sen. "A lot of our exports go actually to America, both commodity export but even more importantly our services they import. And these have slackened," Sen, who was in India to deliver a lecture, said in an interview.

"There are some indications, clear indications, that the American growth-slack would hit India too. And, you know, our growth rate has come down a bit, and we have to see how much further it comes down," he said.

"On the other hand, we are not thoroughly dependent on it. We should try to see what we can do to overcome that," Sen told senior journalist Kalyani Shankar in the interview to All India Radio.

He said while there was nothing wrong in inter-country links in an increasingly globalising world, India had to make sure that the ill-effects of slackening growth in America - or elsewhere - are reduced. But how long would the US recession last? "I have never been a crystal gazer. Well, I think, it goes away in less than two or three years. I will be very surprised if it goes on for more than four-five years."

Sen also spoke at length about India's growth rate, which has averaged around nine percent in recent years and the impact that a democratic system can have on making it sustainable and inclusive. "If you want to make democracy work, you have to make sure that not only the government but the opposition also concentrates on identified major issues," said the Nobel laureate.

"The growth is a non-thought. Growth is not a formula," he said, and added that a democracy needed collaborations to make people and the unions responsible, while also getting them to deliver health, education and other services better.

He said the pressures of a democracy often come from the events of the day like hiking fuel prices or the India-US nuclear pact and to what extent they crowd out solving problems like under-nourishment or lack of schooling and medical care. "So the issue of democracy is quite central to issue of growth," he said, while emphasising that both the government and the opposition parties had to examine if they were harming the cause of removing some long-standing ills in society.

He said a growth of 6-9 percent in India had seen a growth of 8-12 percent in the incomes of state-run companies. "This puts a lot of money in government hand. So the question is what its priority should be."

Sen also said that growth must be widely shared, but that depended on adequate employment, the educational background of the masses and their health so that they could take up the jobs and do the rigours that are needed. "All these relate to each other. This is one way of increasing the sharing of growth. The other way is growth generates income. In fact, it generates more than proportionate income for the public sector, for the government revenue."