Chicago economist and former RBI governor Raghuram Rajan on
global and Indian economic conditions:
Rajan on the challenges facing advanced economies -
“Low interest rates
should not be a substitute for “other instruments of policy” and “various kinds
of reforms” that are needed to encourage growth, Mr. Rajan said in a recent
interview with The New York Times. “Often when monetary policy is really easy,
it becomes the residual policy of choice,” he said, when deeper reforms are
needed.”
Rajan on the Indian economy –
“Mr. Rajan said he
did not support the view of critics that it was too late in world economic
history for India to become a manufacturing hub. But he also said that he would
not focus exclusively on manufacturing as the solution to joblessness. If India improves
infrastructure and reduces government regulations, manufacturing might take off
in a big way, but it “could also be services. It could be value-added
agriculture also.”
Although China’s
economy has overshadowed India’s in recent decades, Mr. Rajan said he was still
a believer in democracy as the better system to create long-term growth. “India’s strengths
to some extent comes also from its democracy,” he said. “Things can get bad in
India, but not beyond a certain point, because the democratic process asserts
itself. And we have a change in government.””