Make for India better approach than Make in India: Raghuram Rajan - Livemint

Page 1 of 5

Like

LIVEMINT | HINDUSTAN TIMES | LIVEHINDUSTAN

Follow @livemint

21 FEBRUARY 2015

HOME

COMPANIES

INDUSTRY

POLITICS

MONEY

OPINION

LOUNGE

MULTIMEDIA

CONSUMER

SPECIALS

BUDGET 2015

INFRASTRUCTURE | EDUCATION | WORLD | REPORTS | AGRICULTURE

CO-SPONSOR

HOME POLITICS

MAKE IN INDIA
WORLD CUP 2015

ASSOCIATE SPONSOR

FIRST PUBLISHED: FRI, DEC 12 2014. 02 36 PM IST

Make for India better approach than Make in

India: Raghuram Rajan
Rajan says an incentive-driven, export-led growth or import-substitution strategy may not work
for India in the current global scenario
Asit Ranjan Mishra
408
Tweet

3.9k

| Garima Singh
24

Share

102
Share

| Sakshi Arora
33
Comments

Subscribe to:

Send

Daily Newsletter

Breaking News

Enter email

Latest News
04:27 PM IST

Kiran Bedi joining BJP a

mistake, says Prashant
Bhushan
04:16 PM IST

Ad industry to see 9.6%

growth in 2015: report
03:17 PM IST

2 AAP MLAs booked, 6

supporters held for clash
with police
03:02 PM IST

How to steal the Oscars

02:39 PM IST

Bihar: RJD, Congress and

CPI yet to decide on
joining Nitish govt

RBI governor Raghuram Rajan said an export-led growth strategy will not pay for India
as it did for Asian economies including China due to the tepid global economic
recovery, especially in the industrial countries. Photo: Bloomberg

New Delhi: Providing the strongest critique to the governments Make in

Editor's picks

India strategy, Reserve Bank of India (RBI) governor Raghuram Rajan on

Friday said India rather needs to make for India, adding that either an
incentive-driven, export-led growth or import-substitution strategy may not

FRI, FEB 20 2015. 07 01 PM

Photo Essay: Shifting

perspectives
FRI, FEB 20 2015. 12 30 PM

work for the country in the current global economic scenario.

Marc Jacobs, Michael Kors

rock New York Fashion
Week

Speaking at an event organized by industry lobby Federation of Indian

THU, FEB 19 2015. 09 13 PM

Chambers of Commerce and Industry, Rajan said an export-led growth

Companies see a
reformist budget: BMR
survey

SLIDESHOW

strategy will not pay for India as it did for Asian economies, including China,
due to the tepid global economic recovery, especially in the industrial
countries. Other emerging markets certainly could absorb more, and a
regional focus for exports will pay off. But the world as a whole is unlikely to
be able to accommodate another export-led China, he said.
The Narendra Modi government, after coming to power six months ago, has

Aero India impresses with

display of stunning
aerobatics and air power
TUE, FEB 17 2015. 01 37 PM

Carnival time around the

world from Rio de Janeiro to
New Orleans
MORE FROM THIS SECTION

launched its ambitious programme to make India a manufacturing

Seven more arrested for

http://www.livemint.com/Politics/nEPZGnUMtLN3o86upKbPsI/Raghuram-Rajan-questions-Modis-Make-in-India-strategy.html

Make for India better approach than Make in India: Raghuram Rajan - Livemint

leaking oil ministry

documents

Page 2 of 5

powerhouse and has advocated for boosting exports and incentivizing import
substitution.
Rajan, however, clarified that he is not advocating export pessimism.
Instead, I am counselling against an export-led strategy that involves
subsidizing exporters with cheap inputs as well as an undervalued exchange
rate simply because it is unlikely to be as effective at this juncture. I am also

TCS files FIR in layoffs

row

cautioning against picking a particular sector such as manufacturing for

encouragement simply because it has worked well for China, he said. India
is different, and developing at a different time, and we should be agnostic
about what will work.
Rajan said the government should rather focus on creating an environment

Narendra Modi launches

charm offensive ahead of
budget session

where all sorts of enterprise can flourish, and then leaving entrepreneurs to
choose what they want to do. Instead of subsidizing inputs to specific
industries because they are deemed important or labour-intensive, a strategy
that has not really paid off for us over the years, let us figure out the public
goods each sector needs, and strive to provide them, he added.
Giving instances, Rajan said small and medium enterprises might benefit
much more from an agency that can certify product quality, or a platform to
help them sell receivables, or a state portal that will create marketing

Opposition stalling
reforms, says Jaitley

websites for them, than from subsidized credit.

On governments strategy for import substitution or trying to manufacture
items domestically rather than importing them, Rajan said such strategy, by
creating tariff barriers, has been tried and it has not worked because it ended
up reducing domestic competition, making producers inefficient and
increasing costs to consumers. Instead, Make in India will typically mean
more openness, as we create an environment that makes our firms able to
compete with the rest of the world, and encourages foreign producers to
come and take advantage of our environment to create jobs in India, he
said.
Rajan said with external demand growth likely to be muted for at least the
next five years, India has to produce for the internal market. This means we
have to work on creating the strongest sustainable unified market we can,
which requires a reduction in the transaction costs of buying and selling
throughout the country, improvements in the physical transportation network,
more efficient and competitive intermediaries in the supply chain from

LATEST NEWS

producer to the consumer. A well-designed GST (goods and services tax)

Bill, by reducing state border taxes, will have the important consequence of
creating a truly national market for goods and services, which will be critical
for our growth in years to come, he said.
Speaking at the same event, former prime minister Manmohan Singh said
India can achieve a growth rate of 8-9% provided there is a national
consensus on methods to take advantage of globalized world. I think that

Kiran Bedi joining BJP a mistake,

says Prashant Bhushan
Ad industry to see 9.6% growth in
2015: report
2 AAP MLAs booked, 6 supporters
held for clash with police

even though many other emerging economies are not doing too well, India
has an opportunity to move towards a growth rate of 6-7% and thereafter to
8%, Singh said.

How to steal the Oscars

Bihar: RJD, Congress and CPI yet to
decide on joining Nitish govt
MORE FROM THIS SECTION

408
Tweet

3.9k

24

102

Share

RAGHURAM RAJAN

Share

MAKE IN INDIA

33

Subscribe to:

Daily Newsletter

Breaking News

Comments

EXPORTS

GROWTH NARENDRA MODI

FROM THE WEB

RBI
Sponsored Links by Taboola

Why People Eat with Their Hands in Kerala

http://www.livemint.com/Politics/nEPZGnUMtLN3o86upKbPsI/Raghuram-Rajan-questions-Modis-Make-in-India-strategy.html

Make for India better approach than Make in India: Raghuram Rajan - Livemint

Page 3 of 5

cooks.ndtv.com

7 Free Personal Financial Planning Tools for 2015

Big Decisions Financial Blog

Introducing 4th Generation Intel Atom Processor,

Intel

The Fourth Generation Honda City Has All W

Autoportal

10 Cars You Should Avoid Buying

Carophile

These 31 Builders Made Mistakes That Will Leave You BAFFLED. Ridiculously
Hilarious.
ViralNova

MORE FROM THE WEB

EARLIER ON LIVE MINT

7 Free Personal Financial Planning Tools

for 2015 (Big Decisions Financial Blog)

Ad industry to see 9.6% growth in 2015:

report

Introducing 4th Generation Intel Atom

Processor, BayTrail, to Android D (Intel)

Narendra Modis $19 billion blitz helps

L&T woo Airbus

The Fourth Generation Honda City Has

All What it Takes to Be Come (Autoportal)

In Narendra Modi, big money backs the

wrong man in India

10 Cars You Should Avoid Buying

What MJ Akbar brings to team Narendra

Modi

Petrol price cut by Rs2.41 per litre,

diesel by Rs2.25

(Carophile)

These 31 Builders Made Mistakes That

Will Leave You BAFFLED. R (ViralNova)

Promoted Links by Taboola

WORLDCUP 2015 NEWS

India seeking selfbelief boost against
Proteas: Kohli

First Ball, Last Ball

World Cup: Dale

Steyn recovering from
flu ahead of India
match

World Cups last

chance XI

BUDGET 2015 NEWS

http://www.livemint.com/Politics/nEPZGnUMtLN3o86upKbPsI/Raghuram-Rajan-questions-Modis-Make-in-India-strategy.html

Make for India better approach than Make in India: Raghuram Rajan - Livemint

Govt notifies rules on

FDI capin insurance

Stock markets to
remain open on budget
day

Companies see a
reformist budget: BMR
survey

Subsidy cuts in budget

may disappoint
investors

The new indie star

Hotstar to stream
Oscars live

Art of the invisible

IIM Calcutta concludes

final placements

ALSO READ

33 Comments

pointed circle

While what Rajan is saying makes sense it is long-drawn and seems to have a high
gestation period in which he is essentially suggesting creation of the environment. It is a
lot more easier for the govt to focus on sectors and have sector-specific plans. However
considering we already are the king of software world, why not ride the momentum there?
In any case the ROI on software/services is much higher than than of manufacturing.

Deep

With a high gst rate proposed of 27% we cannot have a consumption boom and without it
we cannot have a manufacturing boom.

Practical Guy

Do you think some one who comes an invests large money would not think about local
demand? and think of just export? Would that not meet with competition and bring upon a
balance immediately? What are we trying to say here?
Make in India for India is good. But Make in India for export is not bad!! Its a combination
of both that will ultimately make India succeed. If someone disagrees, please give specific
examples.

NPegasus

Why does it have to be export driven growth vs. domestic growth? Why not a combination
of two in healthy proportion? Nobody disagrees that building better physical infrastructure,
and reducing costs of buying and selling (introducing GST) will encourage organic growth.
Mr. Rajan has side stepped on the high cost of capital. How do you finance infrastructure
when the cost of borrowing Indian money is astronomical?

http://www.livemint.com/Politics/nEPZGnUMtLN3o86upKbPsI/Raghuram-Rajan-questions-Modis-Make-in-India-strategy.html

Page 4 of 5

Make for India better approach than Make in India: Raghuram Rajan - Livemint

Companies

Page 5 of 5

: People | Results | Management

Opinion

: Views | Online Views | Columns | Quick Edit | Blogs | Small Picture | Drawbridge

Industry

: Financial Services | Manufacturing | Retail | Telecom | Infotech | HR | Energy

Politics

: Policy | Infrastructure | Education | World | Reports | Agriculture | Human Development

Consumer

: Marketing | Research | Personal Tech | Media | Advertising

Lounge

: Lounge | Business of Life | Indulge

Multimedia

: Slideshows | Videos

Money

: Personal Finance | Did You Know | Mint 50 | Mint Money Columns | Mark to Market | Markets | Ask Mint Money

Subscribe |

Contact Us

mint Code

Privacy policy

Terms of Use

Advertising

Mint Apps

About HT Media

Jobs

Copyright 2015 HT Media All Rights Reserved

http://www.livemint.com/Politics/nEPZGnUMtLN3o86upKbPsI/Raghuram-Rajan-questions-Modis-Make-in-India-strategy.html