What are the key policy interventions, institutional and economic reforms that will enable India to achieve its goal of becoming a developed nation by 2047?
Firstly, credibility of the 2047 goal comes from the reforms that have been implemented over the years. That gives credibility to the steady pursuit of those economic reforms until the goal is reached in 2047. Secondly, it almost entirely depends on the stability of institutions, and stability of democratic institutions in India. There is credibility given to this goal to the extent that India’s democracy has proved to be resilient in many, many difficult circumstances, not only in India but in the rest of the world. These are two elements: stability of institutions and steady pursuit of reforms over time.
One of the major elements which permits us to trust the goal is also the fact that India’s human resources are considerable in quality as well as in quantity.
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You recently flagged risk of a serious market correction. Where is this concern emanating from?
One of the main issues that we have to cope with is over-indebtedness – over-indebtedness in many countries, over-indebtedness at the global level, over-indebtedness in the public sphere, over-indebtedness in the private financial sector. We know that an important cause for the Lehman crisis, subprime crisis, came from excessive over-indebtedness. And, to an extent, we are experiencing that already. I would recommend extreme prudence to all participants in the financial markets.Are you saying it could be as big as the Lehman crisis?
We have to be prepared for anything. But the fact that we experienced Lehman and surmounted this global crisis is reassuring. I would say public authorities are bolder than they were before Lehman. The private sector is also more aware of all the dangers, which is a positive factor. Still, you have a very negative side in the present situation of over-indebtedness.
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What are your thoughts on the impact of AI on economic growth and jobs?
I’m amazed, personally, by the progress that has been made by AI during the last year, last six months, and even last month. To be frank, I have the sentiment from time to time that I am living in a science-fiction novel. On the consequences in terms of economy and unemployment, we should probably distinguish the short- to medium-term effects which could be negative from the more positive long-term effects. As a trained engineer myself, and being fundamentally convinced that any scientific discovery, within appropriate time, will crystallise in a better situation for humankind, I am intuitively convinced that AI will be positive in the longer run.
We can have difficulties in absorbing the new technology, and the transition period might be complicated. But, in the long run, we have to be reasonably optimistic and sufficiently realistic to know that in the medium run, we might have a lot of adaptation problems.
Do you think we need global rules for AI in the same way that we developed international rules for banking and financial stability?
That’s a good concept. The metaphor of what we are doing in the Bank for International Settlements in Basel and in the Financial Stability Board, as regards global financial prudentials, seems appropriate in the case of AI. Unfortunately, we, Indians and Europeans, are observing a very fierce battle between the US and China. And I am afraid that these two countries consider that what counts in their battle is not being hampered by global rules.
It (having global rules) would be the best, but I’m afraid it is not realistic at present. The issue is made even more complicated to the extent that AI itself is a concept which is not stabilised and continues to make significant advances by the month.