India needs 'sensible' regulations to spur growth, says RBI Governor

Mumbai: India needs to have "clever and sensible" regulations to create a business-friendly environment, which will lead to faster growth of the economy and create jobs, RBI Governor Raghuram Rajan today said.

"We need the right kind...not too much, not too little, but clever and sensible regulations. Not just the regulations in the book, but also the enforcement to make sure that businesses have chance to succeed in away that promotes growth and create jobs," he said at the 58th annual general meeting of Indo-German Chamber of Commerce here.

Although the country has enough regulations, not all of them are of the right kind, he said.

Rajan said the country's needs a vibrant financial system which will finance people who want to create jobs and also those who want to pursue higher education.

"We need financial system that give access to all. (Financial) exclusion (of people) is bad in many ways - one they don't have access and second they cannot save in the financial system which can force them to save outside at a greater risk, and at times at a substantially low returns."

He emphasised on providing better education and skills to the working age population. "We need broad level skills across the population, which means we have to improve the quality of education."

The RBI chief said bringing down malnutrition among the population is one of the main concerns the country faces.

"Unfortunately, the direct interventions have had only moderate effects...intervening directly with poor households and providing nutritional supplements has had moderate effects because some people argue it is more than just that."

Rajan further said one of the bigger challenges for India is how to take advantage of its demographic dividends.

"Of course, as many have noted that a demographic dividend can turn into demographic curse if we don't create jobs. So what's important is we reap the benefits of demographic dividend by creating jobs," he added.