Reserve Bank of India (RBI) Governor, Raghuram Rajan on Thursday said that emerging market (EM) economies are increasingly nervous because they fear that with fast changing technology, industrial countries may not need to outsource the production to cheaper developing countries and it would lead to huge job losses.
“Increasingly, the debate is moving to emerging markets that perhaps the industrial countries will get it right this time and they won’t need us,” Rajan said. He was speaking at a launch of a book titled — The World in 2050 published by Oxford University Press.
According to Rajan, predicting non linear events for that far in the future is not possible but the next five years could be extrapolated from the present spot. Rajan said in 35 years time, enormous changes can take place of which we have absolutely no idea.
“There are two sources of threat — one is that guy sitting in Bengaluru can take your job and that certainly was a worry a few years ago in US. The emerging threat is not the guy in Bengaluru but the robot next door who’s going to take your job. This create anxiety in middle class and you can see it expressed in the political dialogue that is taking place both in US as well as the run up to Brexit in Britain,” said Rajan.
The Reserve bank Governor said a number of industrial countries are now resorting to populism and this has its own set of political implications.
Speaking at the same event former Planning Commission deputy chairman, Montek Singh Ahluwalia said inequality is on the rise in India but the nature of inequality is different from the Western countries.
“It is not the same problem as the West is experiencing. They (the West) are experiencing increase in inequality in an environment of overall low growth. We are experiencing inequality in an environment of overall faster growth. The question is are we happier with lower growth But no increase in inequality or is it better to have faster growth and tolerate some increased growth in inequality,” said Ahluwalia.
Later, at the sidelines of the book launch Ahluwalia also welcomed the key takeaways from Prime Minister Narendra Modi’s
“successful” visit to the US, and added that we need to do more to nurture the partnership further.
Ahluwalia declined to comment on the question of extension on Rajan’s tenure.”I am not commenting… I think he (Rajan) has done a fantastic job,” said Ahluwalia.