To head the US Federal Reserve is one of the most challenging jobs: Kishore ...

Kishore Mahbubani, the dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, has been a member of prime minister’s global economic advisors team and is involved in policy making in Singapore as well.

Professor Mahbubani, in an interview with ET, says India’s performance is way below potential and it could be tapped. Edited excerpts:

You have talked a lot about convergence in the global economy. How do you expect it to unfold?

There is a massive convergence taking place. If you want one data, in 2010, the total size of Asian middle class was 500 million. But by 2020, the number is going to explode to 1.75 billion. An increase of three-and-a-half times.

The world has never seen anything like this. This is a massive convergence. If you look at the global middle class, it was 1.8 billion in 2010. It will grow to 3.2 billion by 2020 and 4.9 billion by 2030.

What does that mean for Indian economic growth?

If I say that the most competitive human laboratory in the world is the United States because you have the best and the brightest coming there from all over the world to compete. Twenty or thirty years ago, if you had asked who was the high-achieving ethnic group, you would say the Jews or the Japanese or the Chinese or the Koreans. No one would have said that Indians would be on. It’s amazing to see what ethnic Indians have done in America. That is a powerful demonstration that when you have a level-playing field economically, Indian ethnic group can compete.

That itself shows the gap between the performance and the potential as I say. If the Indians in India achieve half the per capita income of Indians in America, then India can achieve a GDP of $25 trillion. It’s a good question to ask — why are Indians succeeding everywhere else except in India.

You have been a member of the prime minister’s advisory team. What did you advise him?

We meet once a year and have given all kinds of specific advice. India has got a tremendous potential for tourism. Why can’t India do more in terms allowing more flights into India, allowing open sky agreements, less visa difficulties? Tourism is one of the best ways to develop a country.

What are the mistakes that we could have learnt from others?

It is interesting. Montek Singh Ahluwalia once told me that in the nineties when China was first introducing change, it used to send delegations to India to learn how to manage a free-market economy. If the Chinese could come to India twenty years ago to learn from India, then there is no harm in Indians going to China to learn from their experiences.

The Chinese, for example, have set up some wonderful special economic zones (SEZs) that have worked very well. These SEZs are one-stop service centres.

But it did not take off in India?

This is because the bureaucracy is difficult. But you can learn and try. I know it is heretical for Indians to go and learn from China. Remember, Chinese were far behind India at one stage.

What is the role of the West post 2008? Does it remain as powerful?

The West is still very powerful. Certainly if something goes wrong like in 2008-09 financial crisis, it affects the whole world. The difference now is that the capacity of the West to dominate the world the way it did over the past two hundred years is gone. There is no way a little country called England can colonise India again the way it could in the eighteenth and nineteenth century.

In that sense, times have changed. So, the West must learn to deal on an equal basis with the East. And that’s the big change that is happening.

What does the world have in the new Fed chairman Janet Yellen?

It is too early to tell. My initial impression of her is positive. You only discover a man’s or a woman’s character in a crisis. To head the Fed is one of the most difficult jobs in the world. But Bernanke will go down in history as the man who helped steer the US and the world economy through the 2008-09 crisis. So he proved his mettle. You will discover her mettle when a crisis comes.

To head the US Federal Reserve is one of the most challenging jobs: Kishore ...