Former RBI Governor Raghuram Rajan has clarified his remarks on manufacturing in India, stating that he is not against manufacturing itself but remains concerned about the government’s use of subsidies and tariffs in a non-transparent manner.
In a LinkedIn post, Rajan clarified that his previous comments had been mischaracterized. He stated, “We are not against manufacturing or against domestic defense production, or against making more in India. We do not advocate services at the expense of manufacturing. I would love more Indians to have jobs outside agriculture, and manufacturing is certainly one important possibility. I have long been an advocate for enhancing domestic defense production wherever possible.”
However, Rajan expressed concern about the government’s manufacturing policies, which he believes have led to the decline of labor-intensive manufacturing while heavily subsidizing areas like chip manufacturing, where India lacks expertise. He questioned the effectiveness of subsidizing old-generation chip production and emphasized the need for transparency in government policies.
“In sum, far from being against manufacturing, I am more concerned about the use of subsidies and tariffs in a non-transparent way, with the costs paid by the Indian people. After the electoral bond revelations, it is all the more important this government emphasize transparency,” Rajan said.
Rajan’s remarks underscore the importance of transparent and well-designed government policies to support manufacturing and economic growth in India.
