RBI Governor Raghuram Rajan opined that economic reforms in the country are going in the right direction. But at the same time he felt that some of the outdated regulations, which are currently in place, may be impacting the level of reforms.
“Well let me put it this way, the direction is the right one. The level is wrong. We have too much of the wrong kind of regulation and too little of the right kind of regulation,” Rajan told an Indian business and current affairs TV news channel at Davos, Switzerland.
“So we do need to hack away at this, and it will take time, it doesn’t happen overnight. We are doing it. We do recognise that we over-regulate. That business needs a better environment,” he observed further.
Speaking at the sidelines of the World Economic Forum in the Swiss city Davos, the RBI Governor also stressed the need to find the ways to deal with the “whole set of new business” that may just be round the corner.
“For example, online lending. How do we do with what happens in a downturn?” Rajan said elaborating his opinion.
Responding to a question on economic reforms in the country, Rajan rued that people tend to talk only about big ticket items, but not the other reforms that are currently being undertaken.
“Well I think one tends to focus on the big iconic items like in India there’s now a goods and services tax which is likely to unify the country. That’s stuck so far in some Parliamentary discussion between the opposition and the government. Hopefully it will be done sooner rather than later. But really there’s a lot going on the ground which is less obvious,” he said.
“For example last week the Prime Minister inaugurated a programme called ‘Start Up India’ which is about really eliminating the bureaucratic hurdles of starting new business. New business had to register with 10, 15, 20 different authorities including the pension fund,” Raghuram Rajan said.
Elaborating further on the innovations in private sector in India as “very vibrant” he said, “And there’s a very vibrant private sector in India also which is taking off. Internet market places, fantastic new development because what India doesn’t have is cheap land. You
can’t build retail stores everywhere”.
“But if you build a virtual warehouse with warehouses performing the role of you now, storing goods. You can connect small town households to the big market. And you can connect small town manufacturers again to the big market,” Rajan added.
Responding to another question, the RBI Governor said he is not worried about Chinese economic slowdown.
“In terms of the quantity of growth, there’s still a lot of growth coming from China in terms of dollars. Of course percentages are falling all the time. That is naturally to be expected of an economy which is growing richer and therefore which is going to slow,” he said adding, “So I’m not excessively worried about Chinese growth”.
(With inputs from the PTI)