Reserve Bank Governor Raghuram Rajan on Monday came out strongly against ‘crony capitalism’, saying it kills transparency and competition and hence it is harmful to free enterprise, opportunity and economic growth.
“By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth,” Dr. Rajan said.
The banker also noted that “crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians” was a major issue in the recent elections.
He further said that one of the greatest dangers to growth of developing economies like India is the middle income trap where crony capitalism “creates oligarchies that slow down the growth.”
The only way of avoiding this trap is to strengthen public services, especially those for the poor, he said, adding that financial inclusion drive of the government and RBI is a key initiative in the same direction.
