printI watched Indian Finance Minister P. Chidambaram’s interview, some months back, on the Charlie Rose Show. Mr. Rose scolded Chidambaram for his countrymen’s high savings rate, mouthing the Keynesian mantra about the need for non-stop spending so as to keep demand from falling. I recall thinking how morally bankrupt was Mr. Rose’s advocacy of micro-bankruptcy, in the face of the Indian minister’s savings grace.
I have been unable to locate the transcripts for the segment (help?), but in The Hindu (a newspaper), Mr. Chidambaram is quoted as proudly talking up the thing Keynesians shun: savings.
“See, our savings rate in the worst year was 30 percent. In the best year, was 36 percent of GDP. Pick any number between 30 and 36 for incremental capital output ratio, what economists call ICOR, is about 4. Our potential growth rate is about 8 percent.”
The above excerpt is from the Charlies-Rose interview mentioned. The minister did look flabbergast at Rose’s suggestion that savings were a bad thing, explaining ever-so politely that this was a tradition in India.
Rose had smiled patronizingly, as liberals like him do about ethnic exotica.