Batting for reforms in the farm sector in India, former Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday said India cannot have a 'one-size-fits-all' approach and called for decentralisation of reforms.
Responding to a question about the now repealed farm laws, Rajan told India Today in an interview, "I think there are elements in those farm laws which I think many people would agree to. The point is the package as a whole had some problems. The greater problem is that different states, different regions in India require different parts of that package and there is a lot of differentiation across the regions..."
He said one of the reasons for the pushback was the 'one-size-fits-all' approach, and called for decentralisation of such decisions. Rajan said that in a country as wide and diverse as India, the Centre's job is to prepare an overall framework under which states can undertake reforms as per their needs.
"India needs to figure out what has to be managed from the Centre and what can be decentralised," he said.
Rajan said that the pandemic has led to a divide among countries and also within countries wherein one section is doing well and other section is struggling.
Responding to a question on if he supports government providing minimum support to those who are at the bottom of the pyramid, he said, "I think minimum support to the extent that is necessary to keep body and soul together is something this country can afford. We have to target it reasonably, but we have the means to do it if we put effort into it."
Alternatively, he said India can also work on an extensive scheme to tackle urban unemployment as India already has a jobs programme for rural areas.
On Indian economy, the former governor said that India has been able to recover some of the lost ground and the economy is back to where it was pre-pandemic in 2019. While big companies, exports, IT industry and even the start-ups have been doing well, some of the sectors like micro, small and medium enterprises (MSMEs), and hospitality have been struggling.
He called for support for the struggling sectors so that the economy can get back on track and grow at 8-9 per cent growth rate it needs to create enough jobs for the young population.
Rajan also cautioned against inflation, and said it was a result of the strong support provided by the industrialised countries during the pandemic. While inflation has fluctuated in India, the core inflation has been quite strong, he said.
Education, Rajan said, has taken the biggest hit due to pandemic, and called for actions to cover the lost time. India will have to invest in remedial actions and also to improve quality, he said. Besides, investment is also needed in health sector.
"In addition to investment on hard infrastructure, we need investment on soft infrastructure," he said.
The economist said that India has immense potential. It needs to be "sensible", identify the weaknesses and work on them.
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