In a conversation with Kotak AMC MD Nilesh Shah, Roubini shrugged off concerns about coalition politics derailing the country’s reforms momentum. “I think there is some cohesive view that certain types of reforms have to be done, regardless of who is in power,” he said.
China is slowing and external headwinds are gathering force, so India needs to get the reforms direction right and keep going even if the momentum may at times falter, he said. “Whether it’s land reform or labour market reform or bankruptcy reform or more financial inclusion, more investment in skills and human capital, more reform of the bureaucracy and provision of public services-the list is very long,” said Roubini, making a strong case for building on the reforms already undertaken.
A lot of high-tech manufacturing activity may move to India in the wake of the so-called “reshoring” and “friend-shoring,” Roubini said.
Competition policy
India must curb anti-competitive practices, enabling startups and small firms to spur innovation. “In a world in which there is more technology, there is a risk of concentration of economic power-of oligopolies and monopolies,” said Roubini.
“Of course, every country may need to have some national champions, but you can not have really big winners.”
AI conundrum
He underscored the virtues of AI but warned against its disruptive potential across spheres, calling for judicious regulations to harness the best and discard the worst.
Roubini said various AI applications have the potential to boost growth, productivity and economic welfare over the next decade or so.
Importantly, AI can also potentially lead to “massive, permanent technological unemployment” and widen income inequality, he said.
Gloomy global outlook
Roubini said this was a world of geopolitical recession, if not depression. The war between Russia and Ukraine is getting worse and the Israel-Hamas fight could escalate into a full conflict with Iran in the mix. The cold war between the US and China is “getting colder.”
“In a world divided by politics, having international cooperation (to resolve key issues) is hard,” Roubini said.
US election
Roubini said a victory for Donald Trump could pose a heavy risk to the global economic landscape.
His decisions could possibly lead to trade wars. A victory for Kamala Harris would broadly signal policy continuity, he added.
