The eminent economist was asked to comment on former Congress president Rahul Gandhi’s statement in which Gandhi hit out at the Modi government over rising inflation and unemployment and said India looks a “lot like Sri Lanka” and the Centre should not distract people. “This is a silly comparison…suggestions of any parallels between India and Sri Lanka currently are laughable,” Panagariya said, adding that India has rarely borrowed abroad to finance its fiscal deficit. He pointed out that in the case of India, fiscal deficits have not been allowed to get out of hand, the exchange rate has been allowed to depreciate to keep the current-account deficit low, monetary policy has been restrained to keep inflation low, and the opening of financial capital flows has been done in a calibrated fashion. Mr Panagariya, in an interview with PTI, further said since the 1991 balance of payments crisis, successive governments have managed the macroeconomy conservatively. However, lessons can be learnt from the economic crisis in the island nation.
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