The governor of the Reserve Bank of India, Raghuram Rajan has spoken out on issues like governance, democracy and accountability. Economics is linked with politics and a connection exists between democracy, inclusion and prosperity. Rajan pointed out that economic inclusion was essential to sustainable growth. What is more, economic inclusion is not confined to the access of citizens to finance and markets. It comprises quality education, nutrition and healthcare which give economic reform a human face. Rajan commented that strong governments did not necessarily move in the right direction. This is strong comment. Besides, he pointed out that the four important pillars of liberal democracies were a strong government, rule of law, democratic accountability and free markets. These were being undermined in industrial countries by the rising inequality of opportunity. It applies very much to India at the moment, Rajan said.
Rajan specially focused on the theme of inequality. He suggested that the government should get the public on board for its reform agenda. The challenge has been facing the Indian government for long years. The public can support liberalization if it proceeds at the same pace as the broadening of economic capabilities. This brings to the fore the need for equitable distribution. And there is the rub. It will need elimination of concentration of wealth and alleviation of poverty. A revision of the taxation system and suspension of subsidies to the rich will be called for. Of course, the main hurdle is the sizeable number of the BPL population. Raghuram Rajan has no remedies for that.
