Current economic model in India is default: P. Chidambaram
India’s economy is trapped in a square of regulation, investigation and enforcement, crony capitalism and bureaucratic hurdles, said former finance minister P Chidambaram.
- Aug 21, 2026,
- Updated Aug 21, 2026 7:06 PM IST
The current economic model is a default model and is trapped in a square of regulation, investigation and enforcement, crony capitalism and bureaucratic hurdles, said former finance minister P Chidambaram.
Speaking at Business Today India@100, Chidambaram said the current economic model is not based on a deep analysis of the situation on the ground, as it lacks economic knowledge and expertise.
“However politically strong the top executive is, it still requires an economic brain. PV Narasimha Rao (former prime minister) was a political executive, but Manmohan Singh was an economic brain. I don’t know if the present PM can be compared with Narasimha Rao, but nobody today can be compared with Manmohan Singh,” he said.
He said that presently, there is a rules-and-regulations raj in the country, which is as formidable as the old licence raj.
“Current rules and regulations on the statute book are worse than in 1991. The economic design is trapped in regulation, investigation and enforcement, crony capitalism and bureaucratic hurdles. It’s a rules-and-regulations raj and not a licence raj, but it is as formidable as the old licence raj,” he further explained.
On the initiatives to push manufacturing in the country by the current government, the former finance minister said: “The semiconductor drive of the government is out of public money.
“Companies putting up semiconductor plants are subsidised 80-85%, and it is public money and not private money coming in. Where is the large plan and vision which Dr Manmohan introduced in 1991? Manufacturing is at 14%, and this is not a proud product of these initiatives.”
On questions related to Foreign Trade Agreements (FTAs), Chidambaram said these are limited to smaller countries where India’s trade is limited.
“Where is the FTA with France, the US, Germany and China? Major partners, we have not concluded FTAs. How do you conclude with the US with a whimsical leader, China with a veil of secrecy on the Chinese economy, leaving the FTA with the UK, what we had with other European countries is minuscule capacity and is nothing to our gigantic hunger,” he said.
He said the country should develop its own manufacturing.
“We import raw materials, capital goods and accessories from China. We may not have raw materials, say rare earths, but should develop our manufacturing to substitute for imports. We should have a competitive economy, but competition is shrinking. Every sector is a monopoly or oligopoly – telecom, petroleum, cement, steel, airports and ports. And where are the global companies? The Competition Commission of India is toothless, and tell me one recent merger that CCI has stopped,” he added.
India@2047: Blueprint for a Developed Nation
The current economic model is a default model and is trapped in a square of regulation, investigation and enforcement, crony capitalism and bureaucratic hurdles, said former finance minister P Chidambaram.
Speaking at Business Today India@100, Chidambaram said the current economic model is not based on a deep analysis of the situation on the ground, as it lacks economic knowledge and expertise.
“However politically strong the top executive is, it still requires an economic brain. PV Narasimha Rao (former prime minister) was a political executive, but Manmohan Singh was an economic brain. I don’t know if the present PM can be compared with Narasimha Rao, but nobody today can be compared with Manmohan Singh,” he said.
He said that presently, there is a rules-and-regulations raj in the country, which is as formidable as the old licence raj.
“Current rules and regulations on the statute book are worse than in 1991. The economic design is trapped in regulation, investigation and enforcement, crony capitalism and bureaucratic hurdles. It’s a rules-and-regulations raj and not a licence raj, but it is as formidable as the old licence raj,” he further explained.
On the initiatives to push manufacturing in the country by the current government, the former finance minister said: “The semiconductor drive of the government is out of public money.
“Companies putting up semiconductor plants are subsidised 80-85%, and it is public money and not private money coming in. Where is the large plan and vision which Dr Manmohan introduced in 1991? Manufacturing is at 14%, and this is not a proud product of these initiatives.”
On questions related to Foreign Trade Agreements (FTAs), Chidambaram said these are limited to smaller countries where India’s trade is limited.
“Where is the FTA with France, the US, Germany and China? Major partners, we have not concluded FTAs. How do you conclude with the US with a whimsical leader, China with a veil of secrecy on the Chinese economy, leaving the FTA with the UK, what we had with other European countries is minuscule capacity and is nothing to our gigantic hunger,” he said.
He said the country should develop its own manufacturing.
“We import raw materials, capital goods and accessories from China. We may not have raw materials, say rare earths, but should develop our manufacturing to substitute for imports. We should have a competitive economy, but competition is shrinking. Every sector is a monopoly or oligopoly – telecom, petroleum, cement, steel, airports and ports. And where are the global companies? The Competition Commission of India is toothless, and tell me one recent merger that CCI has stopped,” he added.
India@2047: Blueprint for a Developed Nation