COMPANIES

No Data Found

NEWS

No Data Found
Advertisement
India plagued by oligopoly in corporate sector, says economist who predicted the Great Financial Crisis

India plagued by oligopoly in corporate sector, says economist who predicted the Great Financial Crisis

However, Nouriel Roubini, nicknamed 'Doctor Doom' by Wall Street, said that the Indian rupee could become one of the global reserve currencies.

Basudha Das
Basudha Das
  • Updated Feb 22, 2023 6:51 PM IST
India plagued by oligopoly in corporate sector, says economist who predicted the Great Financial CrisisNouriel Roubini, nicknamed as 'Doctor Doom' by Wall Street, said that the Indian rupee could become one of the global reserve currencies

Top Highlights

>  Doctor Doom Nouriel Roubini has said India's growth is getting hindered because of oligopoly in parts of the corporate sector.

> The Indian government’s strategy and policies have helped the businesses and supported its growth after the pandemic period. 

> He said the Indian rupee could become one of the global reserve currencies over a period of time.  

Advertisement

Economist Nouriel Roubini has said that India is poised to become the world’s most important country in the medium term, but its growth is not going higher because of the oligopoly in its corporate sector. 

Speaking at an ET event recently, Roubini said that India has been growing fast even “with much lower investment ratios than China because of the better efficiency of the investment and the location of savings to investment”. 

But he said there is a serious threat due to oligopoly. Oligopolies can be defined as a market condition where it is dominated by limited and often big suppliers. He added that oligopoly will hit the start-up environment, which is a major key to India’s growth. He highlighted that India’s growth rate has already begun suffering thanks to this oligopoly. 

Advertisement

“This oligopoly eventually will hamper competition – domestic and internationally – risk killing new entrants and start-ups. It may lead to lower total factor productivity growth. In fact, if you look at the data, potential growth in India today is not going higher it’s either stagnant at around 6-7 per cent or falling and I think that that degree of oligopoly in parts of the corporate sector is part of the reason why that’s happening,” Roubini said.  

However, the professor Emeritus at the Stern School of Business at New York University said that the Indian government’s strategy and policies have helped the businesses and supported its growth.  

He said the Narendra Modi-led government has made massive investments in the single market and infrastructure, not just roads, electricity, education, and sanitation, but also digital capacity. These investments in industrial policies and digital-based welfare systems have led to robust economic performance after the Covid-19 slump. 

Advertisement

"The growth per capita of India is only one quarter of that of China. With the right policy, growth can be potentially above 7 per cent and that is going to lead India to become a very strong economic power. The country is also going to become a major geopolitical power, both in Asia and globally, given the size, its role, and the fact that you need a strong power to manage the relation also with a rising China,” Roubini told ET during the interaction.  

He further added that there is a strong chance of de-dollarisation over a period of time due to the falling share of the economic heft of the US globally and geostrategic reasons.  

He said the Indian rupee could become one of the global reserve currencies over a period of time.  

Earlier this month, Roubini told The Financial Times that the US dollar’s status as the world’s main currency is in jeopardy.  

“One can see how the Indian rupee could become a vehicle currency for some of the trade that India does with the rest of the world, especially South-South trade. It could be a unit of account, it could be a means of payment, and it could become a store of value. Certainly, the rupee over time could become one of the varieties of global reserve currencies in the world,” Roubini told ET during the interaction.  

Advertisement

In 2022, the domestic currency became the worst performer among emerging Asian peers mainly due to concerns over a wider current-account deficit and a stronger dollar spurred by rate hikes by the US Federal Reserve. This outlook is changing after India reported a drop in its trade deficit. 

Recently, Bofa Securities Inc and Citigroup Inc. predicted that the Indian rupee will gain in the near term due to the narrowing trade deficit. 

Published on: Feb 22, 2023 5:57 PM IST
Post a comment0