To: JPR who wrote (2774 ) 9/18/1998 8:47:00 PM From: Mohan Marette Read Replies (2) | Respond to
'India avoided the worst of the Asian Crisis' says Paul Krugman noted Economist. "India, he said, had "avoided the worst" in terms of the Asian crisis, partly because the existing restrictions discouraged inflows and outflows of short term capital. "The advantage was also because India did not become flavour of the month long ahead of the crisis and was a relatively late entrant into the global scenario. fed on itself", Krugman said. " "The reforms here are more than earlier by far, but only half way there", he said. On capital account convertibility, he said:"It's an extremely dangerous world out there. The risks of getting caught in the pinball game are too high". "On the social costs of closing down weak banks in India, Krugman, an advocate of extreme caution in the banking system to avoid financial crises, said it made no sense to keep unsound financial institutions running only to protect some jobs. "There is a cruelty to our market system. But the cruelties cannot be eliminated." "Comparing the current crisis to that of the 1930s, Krugman, however, said the 30s analogy was qualitative and not quantitative, since this time, a very small percentage of global GDP was affected. "I think there will be a pretty good recovery pretty soon". business-standard.com
