Chandigarh: Reserve Bank Governor Raghuram Rajan on Friday said for the success of Make in India domestic demand needs to be managed "carefully" and industry should be made competitive, while stating that economic security is a must for national security.
'Make in India' initiative could also be an answer to increase opportunities in and around agriculture, he added.
Asserting that RBI is a "perfectly autonomous institution", he also hoped that the Central Statistical Organisation (CSO) will soon give a time series for a better understanding of new series of national accounts (with 2011-12 as base year) which revised economic growth upwards.
Speaking on a number of issues at a interactive session at Centre for Research in Rural and Industrial Development, he said the Reserve Bank of India (RBI) would examine the issue of opening bank branches in Pakistan to facilitate bilateral trade.
Referring to the Modi government's ambitious 'Make in India' programme, he said: "We have to make it sure that there is enough demand. Certainly exports are important. World is growing slowly. Year after year it is not picking up. We have to focus on making industry competitive with rest of world and we have to carefully manage our domestic demand."
Sounding a note of caution earlier in December last year, Rajan had said that Make in India should not focus only on manufacturing.
"I am cautioning against picking a particular sector such as manufacturing for encouragement, simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work," he had said.
Stressing on sustainable growth, Rajan said that national security could not be achieved unless there is an economic security.
"Macro stability is a key in a world which is unstable. We need to preserve buffers, create stability but it is extremely important both for economic security and national security.
"We cannot have national security unless we have economic security and for economic security, we need good economic management across the board. Growth is essential part of it but that growth has to be accompanied by sustainable. As we have sustainable growth, we will expand at high rates in years to come," he said.
To a query, Rajan said that RBI was a perfectly working as autonomous institution.
"I do not think there has been any move for privatization of public sector banks as yet. There has been no discussion on that issue. As far as autonomy of RBI goes, I think we are perfectly autonomous institution," he said.
Rajan further said besides targeting exports, efforts should also be taken on carefully managing domestic demand to fast pace growth.
He also laid stress on improving infrastructure, changing business environment, providing entrepreneur-friendly atmosphere and creating more job potentials.
"We have to reform the financial sector to make it much tolerant to risks," he said.
"How we can fast pace our growth. Even though we want to export to rest of world, we have to recognise that our own domestic demand is managed carefully. Clearly, we have to increase quality and quantity of manufacturing," he said.
On CSO estimates, Rajan that CSO would give the time series of estimates to make better understanding of its growth estimates.
"CSO estimates surprised many people including us as the estimates of growth were revised upwards. CSO has promised to give us a time series of estimates so that we can get better understanding of it," he said.
Earlier also Rajan had said that RBI needed to spend more time to understand the GDP numbers. On the basis of new series with 2011-12 as base year, the CSO had estimated the real GDP growth at 7.4 per cent in 2014-15 and 6.9 per cent in 2013-14.
The Governor also said that major steps were being taken on fiscal front in terms of fiscal consolidation, Goods and Services Tax (GST) and transfer of direct subsidies to beneficiaries.
"These are extremely important steps to ensure (that) we have viable fiscal aspect to a macro economics," he said.
He further said inflation needed to be under control while credit growth should be of high quality for achieving sustainable growth.
"On monetary stability, we have to make sure inflation is under control. There is trust with value of rupee internally and externally, credit growth is of high quality," he said.
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