Atmanirbhar push should not degenerate into inefficient ‘import substitution’, says former RBI chief C Rangarajan

Former RBI Governor C Rangarajan on August 3 said that India’s “Atmanirbhar” push should not degenerate into inefficient ‘import substitution’. 

The former top banker sounded caution while addressing the 14th Convocation of the ICFAI Foundation For Higher Education. 

Owing to supply disruptions caused by the Russian-Ukrainian war, many countries started thinking about being self-sufficient with respect to ‘critical imports’ and India needs to ensure that “Atmanirbhar” should not result in inefficient ‘import substitution’, Rangarajan said. 

He said India’s development strategy should be multi-dimensional and growth may be stimulated by raising investment rate, emphasising agriculture, manufacturing and services, absorbing new technologies and promoting a mix of sectors that are employment friendly. 

“Any import substitution must look at cost. Expensive, import substitution is not to the advantage of anybody. What we need to do is efficient import substitution. Atman should not degenerate into the old-style import substitution. I think that is contrary to what is good for our country,” he said. 

Jobless growth is certainly a matter of concern. But job creation without growth is equally bad even as the new technologies cannot be ignored, the former Chairman of the Prime Minister’s Economic Advisory Council said. Job creation is going to be the toughest challenge ahead not only in India but world over, he added. 

Based on some assumptions about future exchange rate of rupee and domestic inflation, India needs to have an average annual real rate of growth of six to seven per cent annually to achieve over $13,000 per capita income by 2024. 

According to Rangarajan, India need not belittle what it has achieved, there is an inescapable need to strengthen higher education in terms of quality and effectiveness. The three dimensions of the reform of higher education are access, equity and quality, he said. 

(With inputs from PTI)