RBI Governor Raghuram Rajan today sounded a word of caution about the new government's 'Make in India' campaign that assumes an export-led growth path of China and said instead it should be 'Make for India' that will produce for the internal market.
He also pitched strongly for some budgetary incentives for household savings that could help ensure that country's investment is largely financed from domestic savings.
Domestic demand has to be financed responsibly as far as possible through domestic savings, he added.
Delivering the Bharat Ram Memorial Lecture on "Make in India, Largely for India", Rajan commended the government's aim of making more in India for which access to finance should be made easier.
"There is a danger when we discuss 'Make in India' of assuming it means a focus on manufacturing, an attempt to follow the export-led growth path that China followed. I don't think such a specific focus is intended," he said.
The Governor's remarks assume significance in the context of the campaign of Prime Minister Narendra Modi, who had an announced an ambitious 'Make in India' programme in his Independence Day speech.
The governor said that the world as a whole is unlikely to be able to accommodate another export-led China. Industrial countries themselves have been improving capital intensive flexible manufacturing, so much so that some manufacturing activity is being "re-shored". Any emerging market wanting to export manufacturing good will have to contend with this new phenomenon.
