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8th NCAER C.D. Deshmukh Memorial Lecture: David Lipton of IMF speaks on India in a Changing World

Summary:
Apart from RBI, NCAER also organises CD Deshmukh Lecture Series as Deshmukh was the founder father of NCAER. The lecture series started in 2013. In 2020, David Lipton of IMF gave the lecture: Good afternoon. I am honored by your invitation to deliver the 8th C.D. Deshmukh Memorial Lecture. The late Chintaman Deshmukh, a towering figure as RBI governor and later finance minister, helped guide India’s economy through the immense challenges of independence. Perhaps less well known, he also holds a place in the annals of the IMF as a senior member of India’s delegation to the 1944 Bretton Woods Conference, which laid the foundations of the post-war economic order. There, C.D. Deshmukh had the foresight to insist that the IMF and World Bank address the development needs of the countries

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Apart from RBI, NCAER also organises CD Deshmukh Lecture Series as Deshmukh was the founder father of NCAER. The lecture series started in 2013.

In 2020, David Lipton of IMF gave the lecture:

Good afternoon. I am honored by your invitation to deliver the 8th C.D. Deshmukh Memorial Lecture.

The late Chintaman Deshmukh, a towering figure as RBI governor and later finance minister, helped guide India’s economy through the immense challenges of independence. Perhaps less well known, he also holds a place in the annals of the IMF as a senior member of India’s delegation to the 1944 Bretton Woods Conference, which laid the foundations of the post-war economic order.

There, C.D. Deshmukh had the foresight to insist that the IMF and World Bank address the development needs of the countries that would soon emerge from colonialism.

John Maynard Keynes, deeply impressed by his contributions, is reported to have recommended that he run the IMF. I hope that one day we will have an Indian managing director.

Last year, at this podium, Martin Wolf spoke of the “Challenges to India from Global Economic Upheavals.” Since then, we have seen the threat of two of those upheavals recede, if not fade—the U.S.-China trade conflict and a hard Brexit. But new uncertainties always arise, casting a cloud over the global economy. For example, we are only beginning to see the impact of the coronavirus epidemic, which has struck at the heart of global value chains.

But beyond these headline-grabbing problems, governments around the world are struggling to solve a complex policy problem: how to address the secular stagnation that is reflected in anemic productivity growth, falling inflation, and weakening global trade. This is in part the legacy of the global financial crisis. But it is also the new normal of a maturing, globalized world, reinforced by aging societies in Japan, Europe and the U.S., and posing the fiscal challenge of meeting the needs of their senior citizens.

For the most part, secular stagnation is an advanced economy issue, but one with spillovers that concern the rest of the world. Moreover, secular stagnation may be a preview of coming attractions for some rising and aging middle-income countries.

That said, many of you may be correct in thinking that all of this is a long way from India, which in recent years was the fastest-growing large economy in the world. Indeed, your country—with its young and growing population, and a reservoir of untapped demand—already has shown the potential to play an increasingly important role in the global economy.

That is surely the case, despite the recent slowdown. The latest IMF forecast for the global economy underlined the impact on global growth of India’s sharp slowdown in the second half of 2019, which was caused by weak domestic demand and falling credit growth, and problems in the financial system. Clearly, there are significant balance sheet challenges that must be addressed to return to the levels of growth that India has enjoyed in recent years.

If this happens, and India achieves a sustained takeoff, your country can play a unique role. India could be in a position to help invigorate global growth, transform global patterns of trade, and spur investment and innovation. With the right policies—and a supportive global environment—India could become a source of “secular dynamism,” if you will allow me to coin a phrase. If other countries can find their way as well, secular dynamism in the developing world would become the needed counterweight to the secular stagnation of the advanced economies.

These are the topics that I would like to focus on today: an important part of the global economy struggling with secular stagnation; how, in this setting, India and other countries can achieve sustained dynamism; and the crucial role for multilateral cooperation in preserving the integration that will best promote both of these effort.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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