India Should Build More Modern Schools, Universities: Former RBI Governor Raghuram Rajan

India Should Build More Modern Schools, Universities: Former RBI Governor Raghuram Rajan

Former Reserve Bank of India Governor Raghuram Rajan recommended decentralization of power with the Prime Minister's Office (PMO) for a decision for the economic health of the country.

“To understand what has gone wrong, we need to start first with the centralized nature of the current government. Not just decision-making but also ideas and plans emanate from a small set of personalities around the Prime Minister and in the Prime Minister’s Office,” Rajan wrote in his essay titled  ‘How to fix the economy’ in India Today magazine.

Reflecting on the socio-political agenda of the Modi government, Raghuram Rajan said, “Instead of building gigantic statues to national or religious heroes, India should build more modern schools and universities that will open its children’s minds, making them more tolerant and respectful of one another, and helping them hold their own in the competitive globalized world of tomorrow.”

He called for liberalization of capital, land and labor markets and motivated investment. He asked the previous governments to work and said that although they were in a coalition, they continuously worked towards economic liberalization. When power is centralized with the PMO with the absence of strong ministers, the effort will be activated only when the PMO focuses on reforms.

Rajan said that by 2024 a five-trillion-dollar economy would be built, requiring 8-9 percent sustained growth per year. But the economic growth slowed to six-year low with 4.5 percent in the July-September quarter.

“The Modi government came to power emphasizing ‘minimum government, maximum governance’. This slogan is often misunderstood. What was meant was that the government would do things more efficiently, not the people and the private sector would be freed to do more.

Rajan lauded the direct benefit transfer to the recipients as a significant achievement and said that the government's role in many sectors had expanded and not shrunk.

He said that construction, real estate, and infrastructure sectors and non-bank finance companies are in deep trouble. 

He also said that domestic and corporate debt is on the rise and there is a huge crisis in some parts of the financial sector. Rajan also said that reforms are required in land acquisition, labour laws, stable tax and regulatory regime, fast-track bankruptcy resolutions of developers, preserving competition in telecom, proper pricing of electricity and giving farmers access to finance. 

He also mentioned that unemployment is increasing among the youth and is creating unrest. “Furthermore, even if some of the problems are legacies, the government, after five-and-a-half years in power, needs to resolve them. A massive new reform thrust is needed, accompanied by a change in how the administration governs,” he added.

He mentioned that the Modi government showed “surprising timidity” in terms of unfinished reforms on land acquisition, labour, and the public sector.

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