10:52:00 AM
Irrespective of whether Flipkart is an Indian Company or not, it's important to understand - Should Indians buy products from Indian companies to help the economy?

Please read the abstract from an interview with Mr. Raghuram Rajan (Governor, RBI)

Question: In social media we come across posts that ask us to promote indigenous goods. Does it really help the economy of the country?

Raghuram Rajan:
Img Courtesy: 
  1. I don't have a problem with a movement that If people want to buy local or buy domestic that is their choice. If they want to help the neighborhood shop by going there, that is their choice.
  2. But, to force it by saying 'We are going to keep out imports' or 'we are going to prevent you from exercising choice' is more problematic.
  3. It is problematic partly because you are reducing choice, forcing people to buy domestic stuff regardless of how well made it, you are and perpetuating the monopoly of the producer and reducing incentive to improve.
  4. We went through that in the 60s and 70s. You are also pushing up costs.
  5. Remember a number of goods become input for other goods. If I make shoddy goods, that becomes a shoddy input for another goods that also becomes shoddy.
  6. So by forcing people to buy domestic you can perpetuate a culture of shoddiness in the economy. Better to allow competition.
  7. If customers want to buy domestic that is their choice, but it should be out of free will rather than government diktat.

  1. India will be one of the greatest economies, Raghuram Rajan tells students - The Times of India


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