Reserve Bank of India governor Raghuram Rajan speaks his mind, and without mincing words. As prime minister Narendra Modi and other ministers push ahead with grand schemes one after the other and speak in superlatives about the economy, Rajan's seems to be the only sane voice pointing out the unsavoury ground reality.
"There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan said in his address at the 13th convocation at the RBI-promoted Indira Gandhi Institute of Development Research. The questions raised by Rajan have been raised by many experts earlier. But when it comes from the central bank governor, it is clear that the authorities need to sit up and take note.
But then Rajan's comments have always made a difference. Here are six such:
On wilful defaults (read Vijay Mallya and his ilk)
If you flaunt your yacht, massive birthday bashes, etc, even while owing the system a lot of money... it seems to suggest that you don't care. I think that is the wrong message to send out. If you are in trouble, you should show that you care by cutting down your expenses. (In an interview to NDTV)
It has often been said that India is a weak state. Not only are we accused of not having the administrative capacity of ferreting out wrongdoing, we do not punish the wrongdoer, unless he is small and weak.... No one wants to go after the rich and well-connected wrongdoer, which means they get away with even more. If we are to have strong sustainable growth, this culture of impunity should stop. (In a new year message to RBI staff)
So what does an educational institution or a nation need to do to keep the idea factory open? The first essential is to foster competition in the market place for ideas. This means encouraging challenge to all authority and tradition, even while acknowledging that the only way of dismissing any view is through empirical tests. What this rules out is anyone imposing a particular view or ideology because of their power. Instead, all ideas should be scrutinized critically, no matter whether they originate domestically or abroad, whether they have matured over thousands of years or a few minutes, whether they come from an untutored student or a world-famous professor. (In a speech at IIT Delhi)
On Make for India (and not Make in India)
I am not advocating export pessimism here – India has been extremely successful at carving out its own areas of comparative advantage, and will continue to do so. Instead, I am counselling against an export led strategy that involves subsidizing exporters with cheap inputs as well as an undervalued exchange rate, simply because it is unlikely to be as effective at this juncture. I am also cautioning against picking a particular sector such as manufacturing for encouragement, simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work. (In the Bharat Ram Memorial Lecture)
On fast-paced rollout of Jan Dhan scheme
When we roll out the (Jan Dhan) scheme, we have to make sure it does not go off the track. The target is universality, not just speed and numbers... The system is going to be a waste if what we do generates a whole set of duplicate accounts. It is going to be a waste if you do not have full coverage. It is going to be a waste if those accounts are not used, they open and they languish. Many of the persons who are coming into the system are coming for the first time, so if we don't make a good first impression, they will stay out. Let us ensure it works. (At FICCI banking confernce)
On RBI's defacto independence
I would say de facto independence (exists) including in the kinds of people that the government has historically appointed as RBI governors and the kind of space it gives them. The Government of India has the right to give directions to RBI and tell what it should do; there is a clause (on this) in the RBI act. That direction hasn't been given in the history of RBI. So, you have to distinguish from what is de jure from what is de facto and I think, de facto, RBI is independent. (In the press conference after the monetary policy in August 2015)