In an interview with India Today TV Consulting Editor Rajdeep Sardesai, former RBI Governor Raghuram Rajan said that India’s worst mistake would be to think “we can be like China” and to try and walk their path.
“We can’t. Their authoritarian system isn’t ours. We need to focus on our historic strengths of debate and democracy,” he said, advocating for a focus on India’s ‘strong’ services sector as opposed to an attempt to emulate China’s manufacturing power.
In the interview, Rajan spoke on a range of issues concerning India including the threat to the economy during a pandemic that keeps reinventing itself and whether cryptocurrency should be banned. He also said India needs to prioritise education and healthcare and take measures to reduce the gap between rich and the poor in the country.
Here are the top takeaways from the interview:
‘WE CAN’T BE CHINA’
Raghuram Rajan said, “India’s way forward has to depend on India’s historic strengths of debate and democracy. Our worst mistake would be to think we can be like China. They’ve worked within their authoritarian system to create manufacturing power. With our system, we’ll be a shadow of them if we try walking the same path.”
He suggested that India find its own path perhaps a focus on services or education. “Don’t centralise decision-making. Don’t follow the China model,” he said.
Raghuram Rajan said India had huge opportunities even during the pandemic to grow faster. But in the course of that, the democratic strength that puts people first needs to be emphasised, he said.
‘V-SHAPE RECOVERY NOTHING TO CROW ABOUT’
Raghuram Rajan said India’s V-shape economic recovery was not anything to crow about.
“Create a bad enough downturn and the recovery will always be V-shaped,” Raghuram Rajan said.
He said India needed to do a lot of things to get the growth it truly deserves. There are hopeful signs for India, he said, but the recovery is uneven and needs to be spread across sectors.
‘PRIORITISE EDUCATION AND HEALTHCARE’
Raghuram Rajan, professor at University of Chicago, said India needs to prioritise education and healthcare as “soft” infrastructure for the future. He noted that the pandemic had impacted access to education in India. However, Rajan said India could become the education capital of the world.
‘REDUCE INDIA-BHARAT DIVIDE’
To tackle urban poverty, India needed an urban employment programme, the former RBI Governor said.
Raghuram Rajan said Covid-19 pandemic has widened the ‘India-Bharat’ divide referring to the increasing gap between skilled and rich on one hand and unskilled and the poor on the other. He said this gap needed to be reduced.
With regard to cryptocurrency and India’s proposed bill on the same, Raghuram Rajan said, “Cryptocurrency does not need to be banned. There are useful elements to it. We need more information before putting in place regulatory measures.”
‘DECENTRALISE FARM REFORM’
Speaking on reforms in the agriculture sector, Raghuram Rajan said it was urgently needed. He said the Centre’s job was to provide a framework within which policy-making could be decentralised.
“There were elements in the farm laws that many people would agree to. But the package as a whole had some problems. The greater problem is different states and regions in India required different parts of the package. One size fits all doesn’t really apply. This is why we had the push back,” Raghuram Rajan said.
Rajan said states should be encouraged to legislate with greater consultation.