Former Union Minister Rajeev Chandrasekhar on Sunday criticised past economic policies that, he says, neglected manufacturing and left India vulnerable to Chinese imports. Highlighting Prime Minister Narendra Modi’s push to rebuild India’s industrial sector, he said that manufacturing is vital for job creation and economic resilience.
“Once upon a time, there was a dynast and his economic ‘advisor’ who believed that India shouldn’t do manufacturing and should stick to services. In #UPALostDecade, rampant Chinese imports destroyed Indian manufacturing—till PM Narendra Modi started rebuilding it, New India from electronics to semicon,” Chandrasekhar wrote on X.
The former minister underscored the importance of a strong manufacturing sector, noting, “Manufacturing is important—it creates jobs and also middle-class jobs. Our economic resilience also depends on it. Even America has woken up to this.”
Former RBI Governor Raghuram Rajan recently acknowledged progress in infrastructure under Modi’s government but stressed that more needs to be done to boost manufacturing and job creation. He noted that while the government’s focus on production is positive, it must be implemented effectively.
“I would say the intention is good. I think in some areas, we have done a lot, as I said, in infrastructure…we have done a lot that has been very useful,” he said in an interview with PTI in September 2024. However, he stressed the need for policy refinement, adding, “But we need to check the other places. And the best way to check is to ask critics, what do you think? What has happened? Has it happened the way you want it? Should we do more? You get feedback, and then you work along.”
The Modi government’s Make in India initiative, launched in 2014, aims to strengthen domestic manufacturing. Key measures include production-linked incentive (PLI) schemes for 14 sectors, easing foreign direct investment (FDI) norms, reducing compliance burdens, and introducing a national logistics policy.
However, Rajan argued that businesses still face bureaucratic hurdles. He called for “more ease of doing business, especially with regard to government policies and less fear of raids by inspectors or tax authorities.” He urged the government to seek direct input from entrepreneurs rather than relying solely on the World Bank’s ease of doing business index.
India’s Growth and the Road to 2047
Discussing India’s long-term economic trajectory, Rajan said 7% GDP growth could propel the country past Germany and Japan within a few years, but he cautioned that sustaining this growth to achieve developed-nation status by 2047 will require more reforms.
“If we grow at 7%, then we will be past Germany and Japan in 2-3 years. That is not something which is out of the realm of possibility, it will happen,” he said. However, he raised concerns about whether this growth rate would be sufficient to meet India’s development goals.
“Let us say being developed is having a per capita GDP in today’s dollars of about $15,000. If you see that, then you put a 7% growth rate, and you find it is not enough to become $15,000 per capita GDP by 2047—we need to do better,” he explained.
He also questioned where India’s long-term growth would come from and emphasized the need for strategic planning. “What is more worrisome, however, is when we say a developed nation. Now, what does it mean to be developed now? That is also a changing metric,” he said.