Raghuram Rajan pitches for trade pacts across borders in South Asia

Speaking at a session on strategic outlook for South Asia during the World Economic Forum (WEF) annual meeting 2019, the Chicago University professor said India shares with its neighbours a variety of strengths and challenges. Like its neighbours, job creation is a big challenge for India as well, he said, adding that the country has done exceedingly well in the recent past and there is no reason why it should not continue to grow. Harmonisation also at times create problems as seen in the European Union where excess harmonisation has led to concerns now but South Asia can do a lot more better on that front, he noted. “We have seen Germany and France used to be at each other’s throat but they began collaborating after the second world war in sectors like coal and steel and reaped good dividends,” Rajan said.

According to him, power is one sector where it can begin, as it can be produced in one country and sold in another while water is already being shared between India and Pakistan.

Rajan said that there is need for more roads connecting the countries and bridges connecting the countries.

“Why should we not have ports connecting the countries where containers can pass to other countries? We all have our own calamities and for that we can develop regional response forces,” Rajan said.

“All this is possible but we have one big fear and that’s is whether India would dominate if tariffs are lowered for regional benefits but I can tell you that should not be the case,” he added.

Rajan said that Bangladesh has a great textiles sector and that could give a strong competition to India.

“There are strong reasons for India and Pakistan to embrace each other but that is something the two countries need to discuss.”