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Reviving stalled projects, focus on infra key to growth: Raghuram Rajan

Rajan says the government needs to understand the irritants faced by businessmen in the country and make an effort to improve India’s business climate

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Reviving stalled projects, focus on infra key to growth: Raghuram Rajan
Raghuram Rajan
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Reviving stalled projects and a thrust on infrastructure will be the key to India reaching the 8% economic growth in the short-term, said former Reserve Bank of India (RBI) governor Raghuram Rajan. India should focus on removing the bottlenecks on all stalled projects in order to achieve 8-9% growth, he added.

In an interview with Zee Business, Rajan said the government needs to understand the irritants faced by businessmen in the country and make an effort to improve India's business climate. "The variety of world indices used to measure ease of doing business should not be targeted. Because even if India is ranked 20, it may not have the ease of doing business and vice versa. One must ask ten businessmen what are the difficulties in doing business. They may come out with ten different problems and we should try and solve these irritants. If you don’t, then it can cause corruption.”

The biggest problem, according to Rajan, is the land acquisition, which requires multiple permissions from different departments; these difficulties should be ironed out. “We need to maintain the record of income-tax investigation officers so can have the effectiveness," he suggested.

Rajan said it is important that people speak because the government needs to know the truth. Explaining the central bank's function in the economy, he said that the RBI is more than a regulator. Prevention of crisis is more important than solving the crisis. “I was endorsing Make in India but it was misinterpreted that I was opposing it. I was not going against the government. If you are not speaking against something that is going wrong, you are doing a disservice. You should speak because if you don't, the government will not know the truth,” Rajan said.

Power distribution companies and the export sector are other major areas of concern. He said that India needs to examine why our infra projects are going so slow and the process of trying to implement the grand infra projects should de-bottle neck those projects. “We need to ensure that doing business goes easy,” Rajan said.

On the global economy, Rajan said the short-term prospects look good but he cautioned on inflation and geopolitical risks. "Issues of heavy debt in China is a concern, issues are also there in Europe. Inflation due to tighter labour can lead to higher inflation, which means the monetary policy has to move. The geopolitical risk is a concern. Middle-eastern countries are always a source of concern. We need to work more on skill developments and create more infrastructure."

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