Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday said to support business growth and create jobs, India needed the right regulation, as well as its effective enforcement.
“We have a lot of regulation; we need regulation. I am not, by any means, in the camp that says we should have markets without regulation.
Many markets require regulation to work. But we need the right kind, not too much, not too little, but clever and sensible regulation,” he said at an event organised by a German industry chamber here. He added one of the biggest challenges for India was taking advantage of its demographic dividend.
“As many have noted, demographic dividend could turn into a democratic curse if you don’t create jobs. What is important is we reap the benefits of the democratic dividend by creating jobs.”
The RBI governor stressed the need for better infrastructure. “We need the physical environment for better jobs, we need to create better infrastructure. It means improved logistics for the country,” he said.
On imparting skills and education, he said, “We have to have much better skills in our working-age population. We need broad-level skills across the population, which means we have to improve the quality of education.
“We got everybody in schools, but they don’t stay in schools; they drop out too often, too frequently. We need them to stay. We need to give them high-quality education…Equally important in a more service-oriented economy is improving university education…I don’t think we should dismiss that universities are no longer places where the rich go to study; today, they are more mass-market. We need high-quality university education."
"We also need elite university education to educate teachers and researchers so that we can get knowledge built into the economy. This is because new knowledge and innovation will be critical,” Rajan said.
A vibrant financial system could can help finance those who wanted to create jobs, he said, adding this would also allow people who wanted good education by providing them loans.
The current financial system, he said, had a lot of exclusion.
“This exclusion is bad in many ways: First, those excluded don’t have access and second, they cannot save in the financial system."
"They have to save outside, at great risk and, at times, at substantially lower returns. We need to bring them into the system so that they have the ability to save, to send money to their loved ones, to get insurance, to be able to save for old-age pension.” Emphasising the importance of health, he said, “One of the concerns we have is how to bring down malnutrition in the population. Unfortunately, direct interventions have had only moderate effects.”
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