Finance Minister Nirmala Sitharaman has reaffirmed the Indian government’s commitment to boosting the manufacturing sector, despite skepticism from former RBI governor Raghuram Rajan. At the Confederation of Indian Industry (CII) Annual Business Summit, Sitharaman emphasized the necessity for India to enhance the sophistication of its products and provide policy support to the manufacturing sector. She believes that expanding manufacturing is crucial for India to achieve its self-reliance goals.
Sitharaman’s remarks come in response to Rajan’s recent critiques. Rajan has expressed concern over India’s focus on high-profile manufacturing sectors, like semiconductor production, arguing that fundamental issues such as education must also be addressed. While he clarified that he supports manufacturing in India, Rajan is wary of the substantial subsidies given to large firms under the production-linked incentive (PLI) scheme and incentives for chip manufacturers.
Sitharaman highlighted the success of the PLI scheme, particularly in the telecom sector, where it has significantly reduced imports by 60 percent. She asserted the importance of increasing India’s participation in global manufacturing value chains through appropriate policies.
The finance minister also discussed the role of the private sector in India’s development. She stated that Prime Minister Modi views the private sector as a crucial partner in India’s progress towards becoming a developed country by 2047, with the government acting as a facilitator and enabler.
Regarding India’s demographic dividend, Sitharaman noted that the country will benefit from a favorable dependency ratio for the next 30 years. She pointed out that this demographic advantage not only provides a skilled workforce but also opens opportunities for growth in advanced areas such as artificial intelligence and deep data analytics. The government is identifying and enhancing skills in these areas to ensure that the demographic dividend contributes to sustained economic growth.
