RBI Governor Raghuram Rajan talks of strong institutions, slams 'jugaad'

RBI Governor Raghuram Rajan talks of strong institutions, slams 'jugaad'


  • MUMBAI: Coming down hard on quick fixes like 'jugaad' way of working, Reserve Bank Governor Raghuram Rajan today did some plainspeak, saying the key to sustainable growth is strong institutional mechanisms that allow businesses to flourish.

  • "Jugaad, or working around difficulties by hook or by crook, is a thoroughly Indian way of coping, but it is predicated on a difficult or impossible business environment.

  • And it encourages an attitude of shortcuts and evasions, none of which help the quality of final products or sustainable economic growth," Rajan said while delivering the fourth CK Prahalad memorial lecture here.

  • Only then, I believe would we realise the true potential as a nation," the academic-turned-central banker said.Referring to the late marketing guru Prahalad's seminal work around letting businesses find their core competencies, Rajan posed a question on whether nations need to discover their strengths, but seem to advocate against any such moves for fear of vested interests dictating policies.

  • Remember, the licence permit raj persisted precisely because some industries were favoured over others in the so-called national interest," he said.The need for the government is to create the enabling environment in which businesses can flourish, he said.Rajan cited the growth of the information technology sector, saying it grew largely on its own and the government only played an enabling role through investments in technical education and the working of state-owned undertakings like Bharat Electronics.According to some academics, one should not confuse jugaad with true innovation.


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