India can rise on globalisation of services: Krugman

New Delhi, March 17 (UNI) India can ride the next wave of globalisation, of services, Nobel laureate Paul Krugman said here on Saturday.
“India’s growth story is quite unique. Services propelling growth to an extent that hasn’t been seen anywhere else in the world and the possibilities of service globalisation has only just begun,” said the economist at the News18 Rising India Summit.
“Globalisation of service trade has a huge potential. That’s one reason to be especially hopeful of India’s progress. It has the first-mover’s advantage here.”
It used to be said that services are not exportable, they can only be availed locally. India changed that. said Krugman.
“As the world’s economies took off because of growth in the manufacturing sector, India stood apart and unique. It exported services, which was unprecedented.”
The Indian services sector has been for years is the key driver of India’s economic growth and contributed around 53.8 per cent of its Gross Value Added in 2016-17. It includes financial, banking, insurance, non-financial/business, outsourcing, research and development, courier and technical test analysis.
Krugman also warned about problems and the possibility of mass unemployment.
“There is this concept called artificial intelligence that you should be wary of. In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector,” cautioned Krugman.
He said India has the first-mover advantage for a potential second wave of growth, simply because of its working age population. However, the lack of a large manufacturing sector could work against it, as it didn’t have the jobs essential to sustain the projected growth in demography.
“You have to find jobs for people,” he said.
Citing examples of Japan and China, Krugman said, “Japan is no longer a superpower because its working-age population declined, and China is looking the same.
“In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one,” he said.