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Former RBI Governor Raghuram Rajan Cautions Against Import Substitution

Raghuram Rajan said that we have to import first for export. Instead of imposing a high tax, he stressed on creating a better environment for production in India.

 

New Delhi| Former Reserve Bank Governor Raghuram Rajan has cautioned to promote the Import Substitution of imported goods under the government’s ‘Self-reliant India’ initiative. Rajan said, “If the self-reliant India initiative emphasizes that imports can go down by imposing taxes, then I believe this is the path we have followed earlier and it has failed. I would like to be careful about moving forward on this path.”

Raghuram Rajan was addressing a webinar organized by the Center for Financial Studies of the SP Jain Institute of Management and Research (SPJIMR) of Bharatiya Vidya Bhavan on Wednesday.

Rajan Pointed Out To China

Rajan said that exporters of the country need to import cheaply to keep their exports cheaper so that imported goods can be used in exports. Giving an example of China, he said that China has emerged as an export power earlier. It imports various goods from outside, assembles them and then exports the same goods.

Emphasis on creating a better environment for production instead of tax

Raghuram Rajan said that we have to import first for export. Instead of imposing a high tax, he stressed on creating a better environment for production in India. Rajan said that government-targeted spending could be beneficial in the long term. However, he believes that total spending should be monitored and careful. “This is not the time to issue an open chequebook. But in such a situation, if the expenditure incurred on any goal is done with intelligence and caution, then it can give you better results.”

Necessary to take consent of all parties

The former governor of the Reserve Bank said that it is right to pursue the reforms by identifying the real problems. But, this process needs the consent of all parties. People, critics, opposition parties may have some better suggestions. “If you make more consensus among them, then your reforms will be implemented better. He said, “I am not saying that issues should be discussed for a long time. But, in a democracy, it is important that consensus is built.”

One of the biggest hindrances in development is land acquisition

Raghuram Rajan said that one of the biggest hurdles in the development of infrastructural facilities is a land acquisition which requires some technical changes. There should be a better record and clear ownership of the land. Some states have taken initiative in this direction. But, we need to do this across the country, he said.

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