NEW DELHI: “There is a necessity, once again to revisit Gandhian economics with its emphasis on rural self help and sustainable economic development,” said External Affairs Minister Pranab Mukherjee yesterday.
Mukherjee, who also currently holds the Finance Ministry, made his comments at a conference organized by leading think tank Research and Information System (RIS). The theme was “Financial Crisis, Global Economic Performance and Development: Response of Asia and the Global South.”
In his inaugural address, Mukherjee said that with the world facing “a watershed moment” there is a need for a “veritable Marshall Plan to economically uplift the poorest sections of societies worldwide.”
“The global financial institutions need to put more resources for developing countries in the rural economy, build social infrastructure and connectivities, and strengthen local communities. The resources must be put in institutional capacity-building and skills’ development,” he said. Emphasizing the need to revisit Gandhian economics, Mukherjee said, “Anything contrary would be disastrous ... The current financial crisis had its origins in the subprime lending sector in the United States and witnessed the collapse of the banking system in the West.”
He added that the course of the crisis would “profoundly alter the structure of the global economy and have far-reaching implications for the future governance of the world.”
Trends that are “already evident” may be accentuated by the current crisis, said Mukherjee. He also said that while growth rates in the developing world “would remain positive even if lower than earlier projections, the developed countries’ economies would experience a contraction by 2 percent — the first annual contraction after the Second World War.
With India’s per capita income having doubled in the last seven years, “the sharpest rise being in the last five,” inflation adjusted rise in per capita income would be 50 percent, said Mukherjee.
“We expect the economy to grow at 7 percent in the current fiscal despite the global economic downturn,” he said.
Dismissing the thesis on current economic crisis being in part or in its entirety to high savings rate in Asia, Mukherjee said, “The savings rate in the US fell from around 10 percent of the disposable income in the 1970s to 1 percent after 2005.
“The current circumstances make it imperative for developing countries to enhance regional cooperation to mitigate the adverse impact of this crisis. We have the capability to do so and we need to be creative in our cooperation.”
