A Dialogue on India's Economy with Ex-RBI Governor Raghuram Rajan
Key Takeaways:
- Kicking off with demonetization, Raghuram Rajan clarified that it was a decision the government asked RBI to take. It was made under the premise that people would declare their black money and increase taxes, but the reality was starkly different.
- India's path to becoming a world leader is contingent upon increasing productivity and innovation. Diversifying India on a global scale is vital.
- The role of education and healthcare are highlighted in the formation of the human capital that can lead India to become an ideas superpower.
RBI's Role in India's Economy
The Reserve Bank of India (RBI) oversees the country's currency, necessitating a balance between printing money and maintaining its value. To achieve this, the RBI employs several tactics including interest rate adjustments and monitoring inflation levels (source: Raghuram Rajan, Former RBI Governor).
Demonetization Effects and Aftermath
Despite the initial thought that demonetization would lead to the declaration of black money and an increase in taxes, these expectations were not met in reality. In fact, almost 99.8% of the demonetized money returned to the system without any significant increase in tax declaration.
India's Potential for Becoming a World Leader
India, which houses an extraordinarily diverse population, has the potential to rise as a global front-runner. A few important steps towards achieving this include:
- Increasing productivity and using tools more efficiently
- Producing more goods and services
- Adapting to constant innovation and creativity
RBI Governor's Salary and Perks
Former RBI Governor, Raghuram Rajan, shared a peek into the financial privileges that accompanied his position. The salary was around 4 lakhs per annum, with the primary perk being residence in a spacious house in a prime location in Mumbai.
The Contemplation of the Best Indian Finance Minister
The debate for the best Indian Finance Minister, according to Raghuram Rajan, boils down to Dr. Manmohan Singh and Mr. Yashwant Sinha. He credited Dr. Manmohan Singh for the significant liberalisation in the early '90s and Mr. Yashwant Sinha for continuously pushing for further reforms and encouraging privatization.
Personal Finance Advice
Raghuram Rajan shared precious nuggets of financial wisdom, most of which included aspects of saving early, diversification of investments, and taking up challenging jobs for personal and professional growth.
Conclusion
The interview provides valuable insights into India's economic landscape, monetary policies, and the impact of significant events such as demonetization. Nation's growth doesn't solely rely on monetary and financial aspects; more focus is needed on investing in human capital, education, healthcare, and constant innovation in this globalized world.