Describing the current economic reforms in India as moving in the right direction but inadequate, Reserve Bank of India governor Raghuram Rajan said that business in the country needs a better environment.
“Let me put it this way... the direction is the right one. The level is wrong. We have too much of the wrong kind of regulation and too little of the right kind of regulation,” Rajan told Bloomberg TV in an interview on Thursday.
The RBI chief is in Davos to attend the World Economic Forum.
“We do need to hack away at this, and it will take time; it doesn’t happen overnight. We are doing it. We do recognise that we over-regulate... that business needs a better environment,” he said.
He spoke of the regime for businesses sought to be dismantled.
“For example, last week, the Prime Minister inaugurated a programme called Start-up India, which is about eliminating bureaucratic hurdles in starting new business. New businesses had to register with 10, 15, 20 different authorities, including the pension fund,” Rajan said.
“You have one employee, why do you need a pension fund at this point? So the idea here is to make it simpler to start, but also remove the inspections. For three years, no inspectors would show up. You self-certify what you did,” he added.
India’s central bank governor said the reforms have to take into account the entry of new kinds of businesses in the marketplace.
“At the same time there are a whole set of new businesses coming in... we have to find ways to deal with. For example, online lending; How do we do with what happens in a downturn?” he said.
In response to a question, Rajan said he is not too worried about China’s economic slowdown.
“In terms of the quantity of growth, there’s still a lot of growth coming from China in terms of dollars. Of course, percentages are falling all the time. That is naturally to be expected of an economy which is growing richer and therefore going to slow,” he said.
“So I’m not excessively worried about the Chinese growth,” he added.