Protectionism and import substitutions are not the best ways to ensure the prosperity of all, especially the poorest of the poor, but keeping the economy open to the world is, senior Singaporean minister Tharman Shanmugaratnam has said.
Citing domestic concerns, India walked out of the world's largest regional trade formation Regional Comprehensive Economic Partnership (RCEP) last November.
"India will recognise, with time, that it is in its interest to integrate with Asia, which is the fastest growing region in the world. It will be doing so not just because for the sake of the regional deal, but because it is in India's interest," Shanmugaratnam said, while answering a question on the same after delivering the third Suresh Tendulkar memorial lecture at the RBI headquarters here on Tuesday.
"The openness of an economy is a key determinant of long-term sustained income growth. That is the basic differentiator between a whole set of countries in Asia and the emerging world.
"But I recognise the difficulties that India went through in making this (RCEP) decision. I think it is a decision for India to make in its own interest. But openness, whether it is RCEP or other ways of liberalising... are going to be in India's own interests," the minister added.
Stating that the ongoing US-China trade war will have serious lasting implications for the whole world in terms of economic growth as well as geopolitical dominance, Shanmugaratnam also said the worst impact, however, will be on the technological innovations front wherein there is no clear leader apart from these two nations now.
Shanmugaratnam, who is also chairman of the Monetary Authority of Singapore, said if India is to achieve its ambitious target of nearly doubling its economy to USD 5 trillion by 2025, it will have to undertake serious structural reforms to create jobs.
He further said it will not be possible without radical structural reforms in education, labour laws and overall governance by increasing the delivery of the state capacity.
"India has to deliver massively on all these critical areas within the next five years if it were to double the economy. You have only a five-year window otherwise to do all these, or else it will be too late," he said underlining the need for jobs creation as the most-important area to achieve the overall prosperity for all.
With over 250 million people in the 15-25 age bracket, India is home to the largest young population in the world. But, this advantage will become a burden if enough jobs are not created, he said.
"For the next decade, India needs to create at least 140 million jobs. But, this cannot be achieved if education is not reformed to focus on skill enhancement, if India doesn't arrest the number of stunted companies which is the largest in India currently due to poor/stringent labour laws," he said.
On education, he said that although many strides have been made over the years, there is not much impact at the ground level, especially on the skilling side. So, the critical area that needs urgent improvement is the enhancement of skills so that people are employable, he said.
He also urged the Reserve Bank to include in its focus financial and growth stability along with price stability to ensure that financial inclusion is broadened to include the poorest of the poor.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)