Ex RBI Chief C Rangarajan cautions against inefficient import substitution in atmanirbhar push

Import substitution: In his address at the 14th Convocation of the ICFAI Foundation for Higher Education, former RBI Governor C Rangarajan expressed concern that India's push towards self-sufficiency, or "Atmanirbhar," should not devolve into inefficient import substitution. Rangarajan highlighted that while the goal of reducing dependence on imports, especially in light of supply chain disruptions from the Russian-Ukrainian conflict, is essential, it should not lead to high-cost and ineffective practices. Instead, he urged for efficient and cost-effective strategies that align with the country's economic goals.

Multidimensional Growth Strategy

Rangarajan advocated for a comprehensive approach to India’s economic development. He stressed that growth should be stimulated through a combination of higher investment rates, advancements in agriculture, manufacturing, and services, and the integration of new technologies. He emphasized the need to support a diverse range of sectors that are likely to create jobs and drive economic growth, rather than focusing solely on import substitution.

Challenges in Job Creation

Rangarajan acknowledged the challenge of job creation, describing it as a major issue not only in India but globally. He pointed out that creating jobs without accompanying economic growth is problematic. The former RBI chief underscored the importance of addressing this issue by promoting economic expansion alongside job creation efforts. He also noted that technological advancements must be integrated thoughtfully to avoid exacerbating joblessness.

Future Growth and Economic Targets
Discussing India’s economic outlook, Rangarajan stated that the country needs to achieve an average annual real growth rate of six to seven percent to reach a per capita income of over $13,000 by 2024. He mentioned that achieving this target will depend on factors such as the exchange rate of the rupee and domestic inflation. Rangarajan’s comments reflect the need for sustained economic performance to meet future income and growth objectives.

Strengthening Higher Education
Rangarajan also touched on the importance of enhancing higher education in India. He identified three crucial dimensions for reform: access, equity, and quality. He argued that improving these aspects of higher education is essential for fostering a skilled workforce that can contribute effectively to India’s economic growth. Rangarajan called for efforts to strengthen the educational framework to support the country’s broader development goals.