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Clash of Perspectives: Raghuram Rajan’s Economic Remarks and Political Backlash

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Raghuram Rajan and Union Minister Ashwini Vaishnaw Clash Over Economics and Politics

The article discusses the clash between former RBI Governor Raghuram Rajan and Union Minister Ashwini Vaishnaw over India’s mobile manufacturing approach. Rajan’s remarks on mobile phone assembly sparked Vaishnaw’s accusation of political shadow-boxing. The incident reveals the delicate balance between economics and politics, showing how esteemed economists face challenges in political arenas. Vaishnaw advised Rajan to focus on either economics or politics, suggesting that economists often lose their economic sense in politics. Vaishnaw explained India’s phased electronics manufacturing process and projected over 30% value addition within two years. The exchange highlights India’s economic complexities and the blend of theory and practicality.


The ongoing verbal tussle between former RBI Governor and renowned economist Raghuram Rajan and Union Minister Ashwini Vaishnaw has once again thrust Rajan into the limelight, drawing attention to his contentious comments that often clash with the views of the central government. Responding to Rajan’s recent statement, Vaishnaw accused him of dabbling in politics and engaging in “shadow-boxing on somebody’s behalf.” The exchange between the two sheds light on the intersection of economics and politics, as well as the larger debate surrounding the direction of India’s manufacturing and electronics industries.

Clash Over Mobile Manufacturing

The friction between Rajan and Vaishnaw arose from Rajan’s reported remarks on mobile manufacturing in India. Rajan had suggested that India, under the Production Linked Incentive (PLI) scheme, is focusing on assembling mobile phones rather than manufacturing them. Vaishnaw countered this statement, explaining that the process of transitioning to full-fledged manufacturing is gradual for every country. He expressed confidence that India would achieve more than a 30% value addition in electronics manufacturing within the next two years.

Economics vs. Politics

In a direct response to Rajan’s stance, Vaishnaw emphasized the importance of maintaining the distinct roles of economists and politicians. He critiqued Rajan’s engagement in “shadow-boxing” and urged him to either remain dedicated to economics or make a full-fledged entry into politics. Vaishnaw’s remarks highlighted the challenges that arise when respected economists shift their focus towards political agendas, often resulting in a disconnect from their economic roots.

Manufacturing Evolution

Vaishnaw further clarified the progression of the manufacturing industry within a country. He outlined the phased approach adopted by most nations, starting with the introduction of Completely Knocked-Down (CKD) components, followed by Semi Knocked-Down (SKD) stages, and finally, full assembly. Vaishnaw also emphasized that India is in the process of strengthening its mobile manufacturing capabilities and is on track to produce crucial mobile phone components for the global market.

Global Supply Chain and Value Addition

Addressing the complexity of the global supply chain, Vaishnaw stated that few countries can claim a value addition of more than 40%. He asserted that India is striving to achieve a value addition of over 30% in electronics manufacturing within a relatively short period. This underlines India’s commitment to enhancing its manufacturing capabilities and asserting its position in the global electronics market.



The clash of viewpoints between Raghuram Rajan and Ashwini Vaishnaw underscores the intricacies of merging economics with politics and the challenges that arise when prominent economists engage in political discourse. As India navigates the path of technological advancement and manufacturing growth, the exchange between these two prominent figures opens up a broader dialogue on the role of experts in shaping national policies and strategies.

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