Dipti Jain's interview with Dr. Raghuram Rajan

My congratulations to you for conducting this interview with Dr. Raghuram Rajan in a manner that was informed, relevant and pointed.

Reading Dr. Rajan’s articles and listening to him is a rewarding experience always and this interview too showed a Dr Rajan speaking from the heart, touching on all the major strengths and sore points of the word and Indian economies in his characteristic calm and forthright style.

My key captures and related thoughts from this interview are

-        During any effective change management exercise, branding of the change and defining the end state is an important exercise. However, that branding needs to be followed by robust execution to reach the end goals. Coining and announcing a string of attractive words to motivate the populace and mobilise action turns lame if expected results don’t follow. Let us hope the journey to ‘Atma Nirbhar Bharat’ is managed differently.

-        “A lot depends on what policies we enact. We are never a victim of the environment. We can shape the environment”. While we nurse the ambition to be a global leader, we are still comfortable taking the beaten path. We need to reach a space where we take risks – with our trade equations, with our political equations, with our reforms and with our industry.

-        “If we reform in an effective way, we have a strong chance of being in the 5 leading economies of the world in the short to the medium term”. To begin with, we must reform our banks, review our Price Control and Subsidies, privatize public enterprises and revive government machinery. 

As citizens of the country we need to brace for the situation that is to unfold. A higher fiscal deficit is not just something the government needs to deal with; it impacts our financial lives

-        11.5 million central and state government employees and pensioners have already seen an impact on the planned increase in ‘Dearness Allowance’

-        fuel prices have gone up due to the increased taxes levied on it – even as global oil prices have fallen by circa 42%

-        Interest rates on deposits have gone down significantlly (In 2015, SBI offered 8% interest pa on a 5 year deposit. This has now reduced to 5.4%)

-        As citizens we need to build on our resilience - hold on to the job we have, take that cab, shop for groceries in those small kirana stores and the big departmental store chains and continue with employment for those who work for us to ensure we do our bit towards building and enhancing ‘spendability’ (if there is such a word) in our ecosystem. This sounds very simple when compared to the size of the beast we are facing, but we as individuals can start with something simple but sustainable.

As for the government, as Mythili Bhusnur Math says in her ET article in January 2020, “Growth is the elixir. Its time to stop obsessing over fiscal deficit and deliver growth”. As companies and people become more prosperous, they are able to pay more taxes, thereby providing government with revenues to spend and do all the things necessary to honour its contract with citizens”.