RBI guv says strong govt doesn't always move in right direction

  • PTI, Goa
  • Updated: Feb 21, 2015 16:10 IST

Citing Hitler's example, RBI governor Raghuram Rajan on Friday cautioned that a strong government may not always move in the right direction, while suggesting a middle path between unchecked powers to the administration and a "complete paralysis".

Giving a lecture on 'Democracy, Inclusion and Prosperity' in Goa, Rajan said India has strong institutions like the judiciary, the Opposition, media and NGOs, but the government and regulatory capabilities need to be strengthened.

At the same time, the country would have to resist the "temptation to implant layers and layers of checks and balances even before the capacity has taken root," he said.

"We must choose a happy medium between giving the administration unchecked power and creating complete paralysis, recognising that our task is different from the one that confronted the West when it developed, or even the task faced by other Asian economies," Rajan said.

While stating that a strong government should be led by those who have expertise, motivation and integrity and can provide the needed public goods, Rajan warned that "strong governments, may not, however, move in the right direction".

"Hitler provided Germany with an extremely effective administration -- the trains ran on time, as did the trains during our own Emergency in 1975-77.

"His was a strong government, but Hitler took Germany efficiently and determinedly on a path to ruin, overriding the rule of law and dispensing with elections.

"It is not sufficient that the trains run on time, they have to go in the right direction at the desired time," the RBI governor said.

The economic inclusion, he added, should mean easing access to quality education, nutrition, healthcare, finance and markets to all citizens for ensuring sustainable growth.

He further said that in many areas of government and regulation the country needs more specialists with domain knowledge and experience.

"For instance, well-trained economists are at a premium throughout the government, and there are far too few Indian Economic Service officers to go around," Rajan said.

Observing that democratic accountability is very strong in India, he said "we may have a long way to go ... (as far as) the capacity of the government, by this I mean regulators like RBI also, to deliver governance and public services".

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