Raghuram Rajan: Govt’s export-led growth strategy a failure so far

New Delhi: Former Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday said that the export-led growth strategy of the Narendra Modi government as part of its Make In India campaign has been a failure so far.

“One of the things that was implicit in the Make In India campaign was that we are going to get export-led growth for the next few years. That export-led growth thus far measured by exports is a failure,” Rajan said, speaking at the launch of his book I Do What I Do, following a year of self-imposed silence after leaving office in September last year.

Rajan said the government used to say that our exports are not picking up because the world economy is growing slowly. “But the rest of Asia is seeing their exports grow. How much is it because our small and medium industry is in difficulty because of the series of hits they have taken?

Can we focus on things like building the logistics infrastructure, can we focus on improving the export promotion we do? Why is it that we are not pushing our exports stronger than we are?” Rajan asked.

India’s merchandise export growth, at 3.94%, decelerated to its lowest level in eight months in July.

Rajan said apart from boosting exports, the government needs to push harder the lever of infrastructure by focussing on sectors like construction and power to reverse the economic slowdown. The former RBI governor said infrastructure projects like Delhi Mumbai Industrial Corridor (DMIC) need to be fast-tracked.

“When I was governor, I used to talk about the $93 billion DMIC infrastructure project. Can we make that investment so that it can energise coal, cement etc? If land acquisition is an impediment, can we get the parties together using the newfound political capital and say let’s do this?,” Rajan asked.

Rajan said while the Ujwal Discom Assurance Yojana (UDAY) has helped in some financial engineering, the government needs to do more to address the crisis in the power sector.

“In a country which is supposed to have surplus power generation capacity, why are there still areas where we don’t have 24X7 power? Also, we have power producers in great difficulty because they can’t sell their power. That’s because we still have the problem of distribution companies sitting in the middle which are still relatively unhealthy, still making large losses, and not buying power that they ought to be buying. UDAY has gone some way in financial engineering; let’s go further in terms of reducing the line losses and tariffs,” he added.