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Raghuram Rajan on manufacturing: 'Not against making more in India, but...'
Raghuram Rajan said, “We are not against manufacturing or against domestic defense production, or against making more in India."
Former RBI governor Raghuram Rajan said that he is not against manufacturing in India but remains worried about the use of subsidies and tariffs in a non-transparent way. In a LinkedIn post, the former RBI governor said that his comments were mischaracterised.
He said, “We are not against manufacturing or against domestic defense production, or against making more in India. We do not advocate services at the expense of manufacturing. I would love more Indians to have jobs outside agriculture, and manufacturing is certainly one important possibility. I have long been an advocate for enhancing domestic defense production wherever possible."
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He said that he is worried about government's policies with regards to manufacturing as per "which it has let the most labor-intensive parts of the manufacturing system shrivel, even while offering enormous subsidies to areas like chip manufacturing".
Job-intensive areas are suffering, he said, adding that the government is splurging on subsidising chips "an area where we have little expertise, and one which is not essential for progress on other aspects of manufacturing".
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He asked, “How will making old generation 28nm chips improve national security when we will still be dependent on the rest of the world for parts of the supply chain that lead to chip production? Also, when will we be making the 3 and 2nm chips that go into state-of-the-art cell phones? How much more in subsidies will that take?”
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He explained his remarks saying, “In sum, far from being against manufacturing, I am more concerned about the use of subsidies and tariffs in a non-transparent way, with the costs paid by the Indian people. After the electoral bond revelations, it is all the more important this government emphasize transparency.”
