India chooses iPhone factories over asset bubbles

Via Mint | Jun 16, 2015

India s Raghuram Rajan is an outlier in Asia. Whereas other central bankers in the
region are pumping ever-more air into asset bubbles New Zealand and South Korea f
urther reduced interest rates last week, and Australia may be next Rajan has taken
a go-slow approach. It s to Rajan s credit, and India s benefit, that he has shown su
ch discipline. Rajan, a savvy University of Chicago economist, has been holding
Indian Prime Minister Narendra Modi s feet to the fire. Rajan and Modi were both p
robably buoyed by recent news that tech giant Foxconn Technology is looking at m
anufacturing Apple s iPhone in India. It s an endorsement of the country s current eco
nomic stewardship, and an indication of India s broader potential as a manufacturi
ng hub, especially given China s determination to move its production upmarket fro
m basic manufacturing to software design, aerospace and robotics. But if Modi ho
pes to reach the full potential of his Made in India campaign, it will require bol
d government action action that Rajan s quid pro quo strategy could help motivate.