Former Reserve Bank of India (RBI) governor Raghuram Rajan said India is in the midst of a “growth recession” that is being run through extreme centralization of power in the Prime Minister’s Office. In an article in India Today magazine, he called for reforms to liberalize capital, land and labor markets, and spur investment as well as growth. Mr. Rajan asked India to join free-trade agreements in order to boost competition and improve domestic efficiency.
“To understand what has gone wrong, we need to start first with the centralized nature of the current government. Not just decision-making but also ideas and plans emanate from a small set of personalities around the Prime Minister and in the Prime Minister’s Office (PMO),” he wrote. “That works well for the party’s political and social agenda, which is well laid out, and where all these individuals have domain expertise but is counterproductive when applied to the economy of a nation.
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