India has made great progress in infrastructure over the last decade, but it’s not enough, according to former RBI Governor Raghuram Rajan.
Rajan says the country must do much more in sectors like local manufacturing and job creation to truly harness its potential.
“We’ve done a lot in infrastructure, but other areas need more attention,” Rajan told a news agency in an interview on Thursday, adding that while the government’s focus on production is commendable, it’s equally important to get it right.
Reflecting on the Modi government’s flagship ‘Make in India’ initiative, Rajan acknowledged its positive intent but stressed the need for a critical review to ensure it delivers real results.
“In some areas, we’ve made useful progress, like in infrastructure, but we need to check other sectors. And the best way to check is to ask critics, what do you think? What has happened? Has it happened the way you want it? Should we do more? You get feedback, and then you work along,” Rajan told the PTI.
Rajan emphasized that improving ease of doing business is crucial for driving growth, especially by reducing bureaucratic hurdles and the fear of regulatory raids.
“There’s a package that can propel economic growth, and if we focus on that, it will strengthen ‘Make in India’,” he said. He also noted that merely following global metrics, such as the World Bank’s ease of doing business rankings, isn’t enough. The government, he argued, should engage directly with businesses to understand their challenges on the ground.
Despite efforts like the production-linked incentive (PLI) schemes and the easing of foreign direct investment (FDI) norms, Rajan pointed out that the path to becoming a developed nation is still challenging. He expressed concern over whether India’s current growth trajectory is sufficient to meet its ambitious goals.
“If we grow at 7 per cent, then we will be past Germany and Japan in 2-3 years. That is not something which is out of the realm of possibility, it will happen. What is more worrisome, however, is when we say a developed nation. Now, what does it mean to be developed now? That is also a changing metric”.
Explaining further, he said, “Let us say being developed is having a per capita GDP in today’s dollars of about USD 15,000”.
“If you see that, then you put a 7 per cent growth rate, and you find it is not enough to become USD 15,000 per capita GDP by 2047 we need to do better,” Rajan said. The eminent economist also wondered that from where are “we going to generate that growth to become a developed nation by 2047”.
Rajan suggested that coalition governments could drive more agile and consensus-based reform, referencing the PV Narasimha Rao government’s success in implementing significant reforms without holding a supermajority.
