India's Central Banker is mostly correct in the above citation. However, Washington's Peterson's Institute for International Economics has a far better analysis pertaining to Modi's growth strategy. Dr. Rajan is correct to acknowledge the limitations of monetarist ambitions for growth, a problem the U.S. and Japan have NOT learned. India isn't China, so mimicking the export led growth of its communist neighbor won't do either. Lower taxes acknowledges that fiscal instruments remain primary policy tool for New Delhi.
Peterson's Institute for International Economics maintains the following must occur for 'lift off'.
1. New Delhi must expand its engagement with global markets, integrating its export regime to the domestic goal of domestic symmetry. This is how India's government can reduce transaction costs in the hope of unifying a very asymmetric subcontinent. Absent a deepening of its interdependency in global capital markets, there will be NO 'lift-off'. Mega-regional trade agreements are primary to India's reduction of its manufacturing deficit & international competitiveness.
2. International trade expansion would offset inflation while increasing competitiveness and productivity.
3. Growth from F.D.I. would usher in economies of scale to India's indigenous textile, manufacturing, pharmaceutical industries.
4. New Delhi must achieve tax symmetry, labor market reforms, land, subsidy reform. Without these achievements, India languishes.
For an extensive look at Peterson's Institute for International Economics PDF on India http://www.piie.com/publications/briefings/piieb15-4.pdf
Brookings Institute Dr. W. Pal Sidhu 'Modi's 1st Year: The Assessment' https://www.linkedin.com/pulse/modi-governments-first-year-assessment-w-pal-sidhu?trk=prof-post
Brookings India http://www.brookings.in/in_focus_category/indiagov365/
India's Council on Foreign Relations, Gateway House http://www.gatewayhouse.in/about-us/
Peterson's Institute for International Economics maintains the following must occur for 'lift off'.
1. New Delhi must expand its engagement with global markets, integrating its export regime to the domestic goal of domestic symmetry. This is how India's government can reduce transaction costs in the hope of unifying a very asymmetric subcontinent. Absent a deepening of its interdependency in global capital markets, there will be NO 'lift-off'. Mega-regional trade agreements are primary to India's reduction of its manufacturing deficit & international competitiveness.
2. International trade expansion would offset inflation while increasing competitiveness and productivity.
3. Growth from F.D.I. would usher in economies of scale to India's indigenous textile, manufacturing, pharmaceutical industries.
4. New Delhi must achieve tax symmetry, labor market reforms, land, subsidy reform. Without these achievements, India languishes.
For an extensive look at Peterson's Institute for International Economics PDF on India http://www.piie.com/publications/briefings/piieb15-4.pdf
Brookings Institute Dr. W. Pal Sidhu 'Modi's 1st Year: The Assessment' https://www.linkedin.com/pulse/modi-governments-first-year-assessment-w-pal-sidhu?trk=prof-post
Brookings India http://www.brookings.in/in_focus_category/indiagov365/
India's Council on Foreign Relations, Gateway House http://www.gatewayhouse.in/about-us/
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