Raghuram Rajan cautions govt to not enter direction of ‘import substitution’

Former RBI governor Raghuram Rajan says to grow exports, one must import things that enter these exports as cheaply as they will.

Former Federal Reserve Bank of India governor Raghuram Rajan has cautioned against getting into the direction important substitution under the Atma Nirbhar Bharat initiative, saying the country had been thereon path before but couldn’t succeed.

Stressing on the importance of imports, Rajan said that to grow exports, one must import things that enter these exports as cheaply as they will . He said erecting tariffs and thinking only the proper environment for production will make India an export power, won’t help.
According to Rajan, it isn’t time to report back to signing free cheques but targeted spending, which may benefit the economy. this is often not the time to possess a free cheque book. But targeted spending can repay tons if it’s done wisely and punctiliously ,” he said.

He said governments must understand the general impact of the coronavirus pandemic on common people’s lives. If variety of households have stopped sending their kids to high school because they can not afford to try to to so, that again inhibits our growth potential for the longer term as these are getting to be poorly educated kids who are getting to be capable of much less quality jobs,” he stated.

Rajan said reform measures undertaken by the govt to revive different sectors of the economy are good but they need to be taken after considering views of all the stakeholders. People, critics, opposition parties, all have ideas and if the govt builds a consensus, the rollout of such reform measures becomes easier and effective, he said.

He added India must fix its economic system , which needs urgent reforms. We are failing both in quantity also as in quality,” he said. Rajan said that inflation of seven .43 per cent is on the upper side, which the RBI’s stance on policy decisions has been “very accommodative”.

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