Every industry wants to tell us why they especially deserve special tax benefits: RBI Governor
Updated: Sep 18, 2015 02:55:37pm
Mumbai, Sept 18 (KNN) If we say we want to focus on national core competencies, every industry will be out to show why it thoroughly fits the bill - in the same way as every industry today wants to tell us why they especially deserve special tax benefits or interest subventions, said RBI Governor Raguram Rajan.
Remember, the License Permit Raj persisted precisely because some industries were favoured over others in the so-called national interest, Rajan added.
He was addressing on Sustainable Growth in the Financial Sector: 2015 at the 4th C.K. Prahalad Memorial Lecture.
“So even if nations have core competencies, it will be very hard to determine what they are, and very easy to succumb to vested interests in supporting the wrong ones. Better to focus on creating an enabling environment, and let the core competencies emerge from the fillip given by the environment – much as the IT sector emerged as a result of the investment the country made in technical education, but without specific encouragement by the government,” he added.
The RBI Governor said, “There are no easy paths to the top. Jugaad or “working around” difficulties by hook or by crook is a thoroughly Indian way of coping but it is predicated on a difficult or impossible business environment.”
And it encourages an attitude of short cuts and evasions, none of which help final product quality or sustainable economic growth. While we should respect the entrepreneurial abilities of our business people in difficult environments, it is better for us to change the environment for the better. That is indeed what we are trying to do, he said.
“All this requires patience.
The current difficulties of emerging markets stem from a complicated set of reasons, but an important one is impatience to regain growth by overemphasizing old and ineffective methods of stimulus. Brazil may have overspent, China may have overinvested. The world is a difficult place,” he added.
Let us recognize we are doing quite well in comparison – indeed, many industries in difficulty have a problem because exports are low or imports are very competitive, and not because domestic demand is inordinately weak, Rajan said.
We cannot compensate entirely for what is happening across our borders, else we will risk acquiring the problems our fellow emerging markets have. We have to have the discipline to stick to our strategy of building the necessary institutions and creating a new path of sustainable growth where Jugaad is no longer needed. For this, we need the understanding and cooperation of business, not impatience and pressure for quick impossible fixes. Only then can we realize our true potential as a nation, he mentioned.
Deliberating about developing human capital, he said, the country needs many more finance professionals with specific skills for the enormous financing needs that lie ahead.
In our development role, the RBI has to help strengthen the human capital in the financial system. Some of our teaching units such as the College of Agriculture and Banking and the Staff College have been training bankers in important areas such as agricultural lending and MSME lending, he added. (KNN Bureau)
Remember, the License Permit Raj persisted precisely because some industries were favoured over others in the so-called national interest, Rajan added.
He was addressing on Sustainable Growth in the Financial Sector: 2015 at the 4th C.K. Prahalad Memorial Lecture.
“So even if nations have core competencies, it will be very hard to determine what they are, and very easy to succumb to vested interests in supporting the wrong ones. Better to focus on creating an enabling environment, and let the core competencies emerge from the fillip given by the environment – much as the IT sector emerged as a result of the investment the country made in technical education, but without specific encouragement by the government,” he added.
The RBI Governor said, “There are no easy paths to the top. Jugaad or “working around” difficulties by hook or by crook is a thoroughly Indian way of coping but it is predicated on a difficult or impossible business environment.”
And it encourages an attitude of short cuts and evasions, none of which help final product quality or sustainable economic growth. While we should respect the entrepreneurial abilities of our business people in difficult environments, it is better for us to change the environment for the better. That is indeed what we are trying to do, he said.
“All this requires patience.
The current difficulties of emerging markets stem from a complicated set of reasons, but an important one is impatience to regain growth by overemphasizing old and ineffective methods of stimulus. Brazil may have overspent, China may have overinvested. The world is a difficult place,” he added.
Let us recognize we are doing quite well in comparison – indeed, many industries in difficulty have a problem because exports are low or imports are very competitive, and not because domestic demand is inordinately weak, Rajan said.
We cannot compensate entirely for what is happening across our borders, else we will risk acquiring the problems our fellow emerging markets have. We have to have the discipline to stick to our strategy of building the necessary institutions and creating a new path of sustainable growth where Jugaad is no longer needed. For this, we need the understanding and cooperation of business, not impatience and pressure for quick impossible fixes. Only then can we realize our true potential as a nation, he mentioned.
Deliberating about developing human capital, he said, the country needs many more finance professionals with specific skills for the enormous financing needs that lie ahead.
In our development role, the RBI has to help strengthen the human capital in the financial system. Some of our teaching units such as the College of Agriculture and Banking and the Staff College have been training bankers in important areas such as agricultural lending and MSME lending, he added. (KNN Bureau)
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