Atmanirbhar Bharat should not lead to protectionism, says Raghuram Rajan

The Atmanirbhar Bharat campaign should not lead to protectionism as such policies had not worked in the past, but it being used to promote manufacturing activity within the country would be useful, former Reserve Bank of India Governor Raghuram Rajan on Wednesday.

Speaking at a webinar organised by economic think tank ICRIER, he said the emerging market governments need to spend a lot more on relief and repair work in the economy in the backdrop of Covid-19 crisis. Relief should not be confused with stimulus which is typically used to boost demand. Spending on relief — such as helping viable MSMEs — is important to ensure that the productive capacity of the economy is not impaired, he said.

To a query on how he views Atmanirbhar Bharat project, he said: “If it is about protectionism, unfortunately India has raised tariffs recently, (then) it does not make any sense to my mind to go that way because we tried that before. We had a licence permit raj earlier. …that protectionism was problematic, it enriched a few corporations but basically was a source of poverty for many of us.”