Exclusive | Raghuram Rajan On Global Headwinds And The Road Ahead For Indian Economy & Policy
Raghuram Rajan•Former Governor, Reserve Bank of India & Professor, University of Chicago Booth School
Executive Summary
Global economic growth is slowing due to significant uncertainty created by US tariff policies and geopolitical conflicts, impacting business investment worldwide.
India has a major opportunity to attract global supply chains shifting from China, but must achieve 8-9% annual growth, not its current 6.5%, to meet its goal of becoming a developed nation by 2047.
The US faces its own economic headwinds, including a rising probability of recession and a weakening academic sector as restrictive policies push international students and academics to other countries.
To capitalize on its potential, India must implement critical domestic reforms, including ensuring tax predictability for foreign investors, avoiding protectionism, and urgently improving its higher education and R&D capabilities.
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Concerns Raised
Global economic slowdown driven by US tariff uncertainty.
India's potential complacency with a 6.5% growth rate, which is insufficient for its long-term goals.
Rising probability of a US recession, which would have global spillover effects.
Unpredictable tax and regulatory policies in India deterring foreign investment.
Geopolitical instability in South Asia could undermine investor confidence in India.
Opportunities Identified
India can attract manufacturing and service supply chains relocating from China.
Restrictive US policies on international students allow India to strengthen its domestic higher education sector.
Reducing domestic tariffs could make Indian industry more competitive globally.
India's large domestic market remains a significant draw for foreign capital.