Now, RBI's Khan speaks of leadership deficit

Mumbai: Reserve Bank deputy governor HR Khan today blamed the deficit in leadership and legal issues among factors inhibiting growth in the employment-friendly manufacturing sector.

“Everybody is talking of a leadership deficit… We have the right type of entrepreneurs, the right type of aptitude, but the leadership deficit is the number one factor,” Khan said at a Federal Bank event in Mumbai.

Listing seven factors hurting the all important manufacturing sector, Khan said more needs to be done to correct these flaws.

“We are in a very difficult phase of our economic history. We are passing through tough times,” he said.

He said that another deficit stopping the progress of the nation is the lack of vibrance in the manufacturing sector, where the country is targeting creation of 100 million jobs by 2022, as part of the National Manufacturing Policy.

“We have a legal deficit in terms of contracts, in terms of policies, in terms of laws we have, including the law for liquidation… Suppose a company is not doing well, there should be a smooth path for liquidation,” Khan said.

The deputy governor’s comments come amid talks of a leadership and “policy paralysis” within the industry and academia for the economy’s ills.

Khan also blamed problems in fuel linkages for the power sector and other issues related to infrastructure as factors harming manufacturing growth.

He said land acquisition, learning or skill-sets and labour are other difficulties which needed to be sorted out.

The last of the deficits in Khan’s list was liquidity and he said that the RBI will do everything possible to maintain a steady flow of credit to the productive sector.

PTI