Finance Minister & RBI Governor differs on 'Make in India' Programme & Interest Rates

Finance Minister Arun Jaitley is not happy with RBI governor Raghuram Rajan's criticism of 'Make in India' programme. Earlier this month, Rajan had sounded a word of caution about the new government's 'Make in India' campaign, saying it assumes an export-led growth path of China and it should rather be 'Make for India' with a focus on manufacturing products for the domestic market. According to Arun Jaitley, it is about manufacturing of quality products at low costs and it was not relevant whether they are sold in India or abroad.

Speaking at a event, Finance Minister again reminded Reserve Bank of India (RBI) Governor Raghuram Rajan to cut interest rate to provide a fillip to the "Make in India" initiative that aims to make India a global manufacturing hub. RBI has held rates steady since January in an attempt to help bring down the inflation rate.

A "singular factor" contributing to the slowdown in manufacturing growth is the cost of capital, which has remained high for months or years, said Jaitley Manufacturers find it expensive to raise much-needed funds for infrastructure creation, with the efforts becoming more expensive on their books, forcing credit offtake to continue to be depressed, added Jaitley. The manufacturing sector shrank by 7.6% in October this fiscal, while overall industrial production declined 4.2%.