Former RBI Governor Raghuram Rajan believes that the UK could benefit from leaving the European Union (EU) if the government gets the Brexit policy framework right.
Rajan, a former chief economist at the International Monetary Fund (IMF) who has also been tipped by some UK media reports as one of the candidates to succeed Mark Carney as the Governor of the Bank of England next year, said that the Brexit vote in June 2016 was as much a “cry” against London as it was against the EU.
“I don’t think it will be resolved if power goes back to London but doesn’t get diffused to communities. This [Brexit] is as much a cry against London as it is a cry against the EU, he told The Times’.
Asked if he thought Britain’s future might be brighter outside the EU, he said: “It could be, but it does require a lot of things to go right. The big Brexit debate is, can you, in a short span of time, re-engage with the world on equal terms while getting more sovereign powers?
“I have no doubt that there is a scenario in which that can happen, and I have no doubt there are other scenarios where it flops miserably.
The 56-year-old, now based at the University of Chicago Booth School of Business, was also critical of the profoundly undemocratic centralisation of power by the EU and called on Brussels to roll back its federalising agenda and relax its strict harmonisation of standards.
“Do you need the same regulations in every locality? So what if they follow slightly different regulations in Italy than in France,” he said.
In reference to his most recent book The Third Pillar’, he warned that capitalism was under serious threat and that governments cannot afford to ignore social inequality.
He said: “I think capitalism is under serious threat because it’s stopped providing for the many, and when that happens, the many revolt against capitalism.
“It’s [capitalism] not providing equal opportunity and in fact the people who are falling off are in a much worse situation,” he said.
His remarks came as UK lawmakers are set to decide whether to accept the Brexit deal struck by Prime Minister Theresa May and the EU.
If lawmakers vote against the deal on Tuesday evening, they will then get to vote on Wednesday and Thursday respectively on whether the UK should leave the 28-member bloc with no deal or should request a delay to its departure, scheduled for March 29.