Former RBI Governor Suggests India Temporarily Isolate from Global Pressures Ahead of Budget

New Delhi: Ahead of the Union Budget 2026-27 scheduled for 1 February, former RBI Governor Raghuram Rajan has offered strategic recommendations to Finance Minister Nirmala Sitharaman, urging that the budget adopt a long-term, integrated approach to make the Indian economy more resilient, independent, and growth-oriented.

Rajan emphasized that in the current era of extreme global uncertainty, India should briefly distance itself from external pressures to assess and strengthen its domestic economic framework. He noted that while India previously had five-year plans, budgets were never fully integrated to achieve long-term goals.

“Budget 2026-27 should focus on building a resilient and self-reliant economy capable of robust growth, ensuring that India remains an attractive partner globally. This requires significant effort, and I hope the Finance Minister’s next budget moves us in that direction,” he said.

Rajan highlighted both risks and opportunities in the current environment, citing AI investments as promising, but warning against over-dependence on global institutions that could constrain India’s autonomy. He suggested reforms, including potential reduction in tariffs, to better integrate India into supply chains while retaining domestic strength.

He further stated that India should diversify supply chain partnerships with countries such as China, Europe, Australia, Canada, West Asia, and East Asia, without necessarily replicating China’s rapid growth model. “Part of China’s growth was unstable, and we are witnessing issues in its property markets, which will take years to stabilize,” he added.

Rajan concluded that India has a unique opportunity to reform domestic policies and reassess external economic strategies, making the nation stronger and more self-reliant in the long term.