Indian industry no longer an infant: Raghuram Rajan

Indian industry no longer an infant: Raghuram RajanIndian industry is no longer an infant that needed to be mollycoddled with subsidies by the government, Reserve Bank of India (RBI) Governor Raghuram Rajan said.

Speaking at Bancon 2013, Mr. Rajan said that Indian industry didn’t need to be treated like an infant. He even expressed concern over the industry’s frequent demands for protection and subsidies.

He added that giving protection to a domestic manufacturer cause cost disadvantage to some other domestic producer.

Speaking on the topic, he said, “We must remember that one domestic producer’s advantage from protectionist profits is paid for by the consumer, or shows up as another domestic producer’s cost disadvantage.”

The Governor also announced that the RBI would implement one of its internal committee’s recommendations on deepening & broadening the bond market in the next few weeks. A deeper and liquid market will allow lenders to cut exchange rate and interest rate-linked risks and help companies raise funds via equity.

Commenting on high inflation rate, Mr. Rajan said that weakness economy would itself drag down inflationary pressures and the central bank would take all necessary steps to cut it further. Recently released data showed that India’s wholesale price index (WPI)-linked inflation jumped to an 8-month high of 7 per cent in October this year. Retail inflation jumped from 9.84 per cent in September to 10.07 per cent in October.