Privatising banks is essential

Eliminating onerous regulations is the first step in reforms that India needs to take towards its goal of becoming a developed country by 2047, said RAJNISH MEHRA, economist, University of Arizona. In conversation with Ruchika Chitravanshi in New Delhi, Mehra stressed that lateral entry in the government is critical and added that the bureaucracy is not going to voluntarily do anything that diminishes its influence. He said that it will take strong leadership from the Prime Minister to push these changes through. Edited excerpts:

- RAJNISH MEHRA, Economist, University of Arizona

You have talked about the need for reducing the government's involvement in the financial sector. What are your suggestions?

Privatising banks is essential. Government involvement often crowds out private capital, which is critical for growth. When we talk about stimulating growth, it's essential to ensure that capital is available for productive investments. Privatisation would enable the banking sector to better allocate resources.

India wants to become a developed country by 2047. What should be the key reforms we need to undertake?

Even small differences in growth rates can have significant impacts over time, thanks to compounding. However, sustaining rapid growth rates for long periods is extremely challenging but achievable. South Korea is one example. The first step should be eliminating onerous regulations.