‘There’s no room for another China’: Raghuram Rajan says India must ditch factory job dream

Former Raguram Rajan governor, India should give up the ambition to become “next China” in manufacturing, warning that global conditions and structural restrictions make growth on a large -cost low -cost growth not beyond that.

In a large -scale interview with Frontline, Rajan warned against relying on traditional manufacturing as the essence of a job creation strategy in India. He said: “There is no room for another for a thief,” noting that global industrialization is increasingly assigned, pregnant and satiated by countries such as Vietnam and China that combine low wages with strong infrastructure.

Even low -skilled sectors such as assembly are experiencing rapid adoption of machines. “What companies now need is the people who can tend to machines and repair machines – not those who do handicraft machines replaced,” said Rajan.

The problem is exacerbated by the rise in nationalism in global manufacturing. “Everyone wants to make their small manufacturing,” note. “We cannot expect this number of jobs in manufacturing.”

Rajan’s comments come as India moves in a critical stage in its economic track. With the low dependency and the huge young manpower, India should benefit from its alleged demographic profits. However, he argues that the country is stuck in the “low Earth orbit”, with consistent growth but not sufficient from 6 to 6.5 % – historically, but not enough to become rich before aging outperforms the population, especially in states such as Tamil Nadu and Kerala where fertility rates are already lower than the level of replacement.

Instead of chasing an unrealistic manufacturing model now, Rajan urged a multiple approach. He said that India is already exceling in high -value services, as it represents 4.5 % of global services exports. Although this sector will not absorb all job seekers, it represents an important column for future growth.

He added that it is equally important, it increases mild skilled household services – accommodation, truck driving, plumbing, and repair work. These roles can absorb millions if they are supported by building concentrated skills. Rajan urged: “Get a job wherever, create a job wherever you can.”

He stressed that India needs to harness every opportunity – whether export and local – to accelerate growth beyond the current plateau. He said: “We are the fastest growing country in the group of twenties, but also the poorest on the basis of the individual. This must change.”