The RBI’s unhappiness isn’t new. It stopped Paytm Payments Bank from onboarding fresh customers nearly two years ago. Last year, while imposing a fine of $650,000 on the bank, the regulator highlighted a number of violations, including failure to identify beneficial account owners and a video-based customer identification that allowed connections from IP addresses outside India.
Paytm is facing a regulatory curb by Mint Street. Former RBI Governor Raghuram Rajan had warned about Paytm's likely discomfort with regulators. Paytm is facing complaints of violating banking compliance norms, conflict of interest, lax processes allowing fraud, and licensing agreement breaches. RBI's technical audit reportedly found accounting and supervisory problems due to money and data traffic flows between Paytm Payments Bank and the rest of Paytm.
RBI aimed to redirect funds from Paytm Bank's deposit accounts back to those who had initially deposited their money with Vijay Shekhar Sharma's bank. The potential decline of Paytm Payments Bank may not be a concern for the RBI. Despite the limited impact of payments banks on the overall financial system, the move sparked panic among numerous merchants and users of Paytm's UPI service and FASTag business.
He added that the recent cases by the Enforcement Directorate and other central agencies against opposition leaders before elections were "undemocratic" as citizens were being left with little choice while choosing leaders (from the opposition).
Economist Raghuram Rajan has said that India needs to focus on education and healthcare to become a developed economy by 2047. He emphasised the need for governance reforms and a strong foundation in education and healthcare. Rajan emphasised the need for balanced growth across all sections of society, as consumption growth is currently strong among the upper income levels.
Former RBI governor Raghuram Rajan and former chief economic adviser of India, Arvind Subramanian, believe that Tamil Nadu has the potential to become a $1 trillion economy. Rajan stated that Tamil Nadu can benefit greatly from this goal and that the state should focus on higher-end manufacturing. Both experts acknowledged the competition from other states like Uttar Pradesh and Maharashtra and stressed the importance of focusing on the higher end of manufacturing. Achieving this goal would require Tamil Nadu to grow at 18% per annum for the next seven years.
Addressing a session at Tamil Nadu Global Investors Meet 2024, the former RBI governor said, "Don't oversubsidize manufacturing and think that's the only part of growth. Services are also a big part of the growth story, and let's not treat services as a stepchild less valuable or less amenable to low-skilled jobs.
Raghuram Rajan, former RBI Governor, emphasizes that India needs to address malnutrition and focus on its human capital to become a developed nation. He questions how the country can achieve development when malnutrition is prevalent. Rajan highlights the importance of nurturing human capital by offering large-scale training. He believes that training a large number of people well will lead to significant value creation. Rajan also expresses confidence in the cleaning up of the banking system during his tenure as RBI Governor.
The former RBI chief said some southern states are growing with regards to population at below reproduction rate, in other words, the fertility rate has fallen below reproduction rate thus slowing the growth. "In other words, we will start the process of aging at some point around that time, which leads to the alarming question if we don't grow faster, we will grow old before we grow rich, which means we all have all the burdens of an aging population to deal with also at that point," he opined.
Former RBI governor warns that India will remain a lower middle-income country by 2047 if the growth rate remains at 6% annually without population rise. The country will reach the end of its demographic dividend and face the burden of an aging population. The per capita income will only quadruple to $10,000 if the current growth rate continues. Some southern states are experiencing a decline in fertility rate, leading to a slower population growth. The current pace of growth is insufficient to employ new labor force entrants and make the country richer before it gets older.
"Parts of the Indian economy are first world," Rajan asserted, emphasizing that a significant challenge lies in bridging the gap and ensuring a uniform economic landscape across the nation by 2047. This observation comes amid Minister of State for Finance Pankaj Chaudhary's recent statement, envisioning India as a $5 trillion economy on its way to becoming an advanced economy by 2047, during the 'Amrit Kaal.'
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