The former RBI governor also came down hard on the Centre바카라s import substitution policy, calling it a 'terrible idea'.
Former RBI governor Raghuram Rajan has cautioned the central and state governments in India against using populist measures that stand in the way of providing good quality public services. Rajan termed the practice of political parties promising something free for everyone in the run-up to elections as 바카라sheer populism바카라.
In an exclusive interaction with Outlook Business, he said, 바카라Populism constrains government resources for what it really needs to do, which is to provide quality public services.바카라 He clarified that targeted transfer of cash and goods has its share of benefits but highlighted its dangers too.
바카라I think targeted benefits at the relatively poor, helping them invest in themselves, is not a bad thing. But using that to substitute providing public goods in terms of better schools, better healthcare, and more access to finance is a mistake. We shouldn't let the freebies and the revdis be the alternative to actual access to public services,바카라 said Rajan, who headed the country바카라s central bank from 2013 to 2016.
When it comes to industrial policies, Rajan criticised the Centre바카라s import substitution strategy. 바카라Import substitution is a terrible, terrible idea. If we want to be part of global supply chains and are serious about manufacturing, we have to seriously consider our policy uncertainties,바카라 said Rajan on Thursday, after the launch of his new book Breaking The Mould: Reimagining India바카라s Economic Future, co-authored with Rohit Lamba.
To boost its domestic manufacturing capability in sectors like electronics, India has been imposing high tariffs on the import of products. At the same time, the government has also been incentivising manufacturers to produce domestically through subsidy programmes like the production-linked incentives (PLI) scheme.
The PLI scheme for smartphone production is considered to be a success by the Centre, with 98 per cent of India바카라s overall mobile shipments in 2022 being 바카라Made in India바카라. This was less than 20 per cent a decade ago, according to data from Counterpoint Research. Union Minister Ashwini Vaishnaw recently said that India바카라s local value addition in certain smartphone production is over 15 per cent.
In the PLI 2.0 programme for IT hardware manufacturing, Vaishnaw claimed that the scope for value addition is 30 and 48 per cent. But Rajan is not convinced of these figures, citing lack of transparent data.
바카라Sometimes, what happens is that you add the producer's margin and this and that, and it gets shown in India as value added. We need to know what exactly is coming under value added. These things need detailed calculations. Unless these numbers are made public and somebody scrutinises them, I don't know what is being talked about [by the government] at this point,바카라 added Rajan.
(A detailed interview with Raghuram Rajan will be published in the January issue of Outlook Business magazine.)