Thus spake outgoing RBI governor Raghuram Rajan

Rajan is known for witty and honest views on economic affairs

GN Bureau | June 20, 2016


#banking   #RBI   #Economy   #Raghuram Rajan  


Amidst the speculations and debate over serving a second term as Reserve Bank of India (RBI) governor, Raghuram Rajan declared that he would return to academia after his term finished in September. Rajan is known for witty and honest views on economic affairs. Here are top quotes from his select speeches he delivered during his term which started in September 2013.


  • "I am often asked, “What industries should we focus on, what should we encourage?” Learning from our past, I would say let us not encourage anything; that might be the surest way of killing it. Instead, let us make sure we create a good business environment that can support any kind of activity, and then let our myriad entrepreneurs figure out what new and interesting businesses they will create. In the 1990s, the IITs that Pandit Jawaharlal Nehru created to supply engineers to the commanding public sector heights of the economy instead supplied managers and programmers to body shops focused on dealing with the Y2K bug. These in turn evolved into our world-beating software giants. While the government did not create the software industry, it was not inconsequential by any means to its emergence and development. Similarly, let us enable business activity but not try and impose too much design on it."



  • "We have to have the discipline to stick to our strategy of building the necessary institutions and creating a new path of sustainable growth where Jugaad is no longer needed. For this, we need the understanding and cooperation of business, not impatience and pressure for quick impossible fixes. Only then can we realize our true potential as a nation."




  • "Many of you must receive frequent emails, purportedly from me, informing you of a large sum of money that awaits you at the RBI, and urging you to send me your account details so that I can transfer the money to you. Let me assure you that the RBI does not give out money, I do not send these emails, and if you do fall for such emails, you will lose a lot of money to crooks and be reminded of the adage – if anything looks too good to be true, it probably is not true."


  • "India is an open argumentative society. But we are prone to mood swings, perhaps more so than other societies, perhaps in part driven by our excitable competitive and very young press. Stripping out both the euphoria and the despair from what is said about India – and from what we Indians say about ourselves – will probably bring us closer to the truth."



  • "As the Chinese would say, let us recognize the value of crossing the river by feeling each stone before we put our weight on it. Let us not take a blind jump hoping that a stone will be there to support us when we land. Or in American, if it ain’t broke, don’t fix it!"



  • "IITans like you will lead India’s race for ideas. The India that you will graduate into is much more capable of using your technological prowess than the India we graduated into. I wish you unlimited ambition, and forecast great success for those of you who continue thinking and challenging. But as you go out in the world, remember our tradition of debate in an environment of respect and tolerance. By upholding it, by fighting for it, you will be repaying your teachers in this great institution, and your parents who worked so hard to send you here. And you will be doing our country a great patriotic service"


  • "Our provision of public goods is unfortunately biased against access by the poor. In a number of states, ration shops do not supply what is due, even if one has a ration card – and too many amongst the poor do not have a ration card or a BPL card; Teachers do not show up at schools to teach; The police do not register crimes, or encroachments, especially if committed by the rich and powerful; Public hospitals are not adequately staffed and ostensibly free medicines are not available at the dispensary; …I can go on, but you know the all-too-familiar picture."



  • "I think we all have work to do to improve public dialogue. Speakers have to be more careful with words and not be gratuitously offensive. At the same time, listeners should not look for insults everywhere, and should place words in context so as to understand intent. In other words, for effective communication and debate, rather than the angry exchanges that we see on some TV shows, we need both respect and tolerance. The greatest danger of all is that we do not communicate or debate, for then we will allow distorted stereotypes to flourish unchallenged, and divisiveness to increase. In a country like ours, conceived and flourishing in diversity, that will truly be a disaster."


  • "The fundamental problem, though, is scarcity. We cannot accommodate everyone in the room who might have interest in a particularly important hearing. So we have to “sell” entry. We can either allow people to use their time to bid for seats – the one who stands the longest wins the seat -- or we can auction seats for money. The former seems fairer, because all citizens seemingly start with equal endowments of time -- we all start with 24 hours in a day. But is a single mother with a high pressure job and three young children as equally endowed with spare time as a student on summer vacation? And is society better off if she, the chief legal counsel in a large corporation, spends much of her time standing in line for hearings?"



  • "We are more dependent on the global economy than we think. That it is growing more slowly, and is more inward looking, than in the past means that we have to look to regional and domestic demand for our growth – to make in India primarily for India. Domestic-demand-led growth is notoriously difficult to manage, and typically leads to excess. This is why we need to strengthen domestic macroeconomic institutions, so that we can foster sustainable and stable growth. At the same time, we cannot let foreign markets shrink further, and we have to take up the fight for an open global system. Rather than being reactive, we have to be active in setting the agenda. That requires investment in our idea-producing institutions – research departments of official bodies, think tanks, as well as universities. In sum, the diminished expectations in the world at large should not be a reason for us to lower our sights."




  • "As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy. Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years before we can give every Indian a decent livelihood. This is not to disparage what has, and is, been done. The central and state governments have been creating a platform for strong and sustainable growth, and I am confident the payoffs are on their way, but until we have stayed on this path for some time, I remain cautious."


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