Root problem: labour laws

Delivering the third Business Standard lecture on Thursday night, Raghuram Rajan provided an interesting insight into the reason for high inflation in India. The professor of finance at Chicago, who is also an adviser to the Prime Minister, argued that productivity growth in Indian agriculture had been poor, so rural incomes were not growing fast enough. In its effort to deal with this, the government was pumping subsidies and income transfers into the countrywide, to put money in people’s pockets — which the recipients were spending.

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