Former RBI Governor C. Rangarajan issued a warning on August 3 regarding India’s “Atmanirbhar” (self-reliant) initiative, advising against inefficient ‘import substitution’ practices. Speaking at the 14th Convocation of the ICFAI Foundation For Higher Education, Rangarajan emphasised that India's development strategy should be comprehensive, incorporating increased investment, advancements in agriculture and manufacturing, and technological innovation.

Rangarajan stressed that any approach to import substitution must be cost-effective and warned against relying on outdated and inefficient methods. He highlighted the need for a multidimensional development strategy that includes enhancing investment, modernising agriculture, and advancing services to foster job creation and economic growth.

Import substitution is an economic policy designed to reduce reliance on imported goods by encouraging domestic production through measures such as tariffs, quotas, and subsidies. This strategy aims to stimulate local industries, create jobs, and build domestic capabilities. However, critics argue that if domestic industries are protected from competition for too long, it may lead to inefficiencies, higher production costs, and lower-quality goods. Without adequate competition, local businesses may lack the incentive to innovate, which can impede overall economic progress.

Rangarajan also addressed the challenge of job creation, recommending that India aims for an average annual real growth rate of 6-7% to achieve a per capita income exceeding $13,000 by 2024. Additionally, he underscored the need to improve higher education in terms of access, equity, and quality to support the country’s development goals.

(Source: Republic World)