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Indian economy failing, urgent steps needed: Raghuram Rajan

HYDERABAD, APRIL 7: 

Corruption scandals and deteriorating macro economic health have marred the country's governance.

This has led to the domestic industry not wanting to invest in the country any longer, according to Dr Raghuram Rajan, Professor of Finance at University of Chicago.

"Alarm bells should start ringing when the domestic industry no longer wants to invest in India, even while eagerly investing abroad," he said.

Delivering the graduation day address at the Indian School of Business (ISB) on 'Indian governance and change', Dr Rajan said that even though there are many examples of achievement in India such as Delhi Metro or success of milk production, "we should also be realistic about India's deficiencies".

Dr Rajan, who is also Honorary Economic Advisor to the Prime Minister, said that the Government "does too much of what it should not do and too little of what it should do".

The Government ownership hurts public sector firms, low salaries at top and continuous interference impedes the ability to attract talent in a competitive environment. The natural reaction of the Government is to protect its progeny by giving them special privileges. This tilts playing field against private sector. He cited the example of Air India.

He also mentioned issues about Coal India and its monopoly and recent judgments on Vodafone and moves to bring about amendments to law retrospectively.

The ISB today celebrated the graduation day of Class of 2012 of Post Graduate programme in management.

The ISB Dean, Mr Ajit Rangnekar, said that by next week the Mohali Campus will start its classes and together there will be 770 students next year. This includes 560 at Hyderabad and 210 at Mohali.


From: http://www.thehindubusinessline.com/industry-and-economy/economy/article3291210.ece

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