Free enterprise still relevant, unavoidable: Raghuram Rajan

December 19th, 2008 - 11:27 pm ICT by IANS  

Manmohan SinghChennai, Dec 19 (IANS) Raghuram Rajan, econonmic advisor to Prime Minister Manmohan Singh, Friday said that free enterprise was still relevant and important for India at the time of global financial crisis.”World over, middle class has lost huge wealth in the recent global financial crisis. Their attitude is now against free market economy. But market economies are prone to crisis. South Korea faced four crises since the ’60s but it has weathered them,” he said at PanIIT 2008, a global conference of Indian Institute of Technology (IIT) alumni conference here Friday.

While saying that financial regulations have to be improved, he pointed that capitalist system is the one that brings out innovation.

“Look at the alternative - a government owned system - where the politician will be the patronising personality.”

According to him, the middle class should ensure that the lesser privileged sections get access to education and healthcare, failing which the system will be in the hands of patronising politicians.

“Recall where India was and where it has come now. It is time for the middle class to take along the lesser privileged sections so that the fruits of free economy is shared by all,” he told the conference.

Agreeing that there may be some lay offs in some sectors, he said consumption in India would not fall drastically.

“The fall is in corporate investments as they have decided to wait and watch. This issue has been addressed by the government by reducing the interest rates and focus credit flows for investment,” he said.

It is time to reenergise infrastructure spending, he said.

He admitted to the fact that India would experience deficit, Rajan said subsidies should be cut on items like oil, cooking gas and other items.

“We should look at the possibility of providing money directly to weaker sections who can decide on what to buy instead of providing subsidised kerosene,” Rajan said.

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