Reserve Bank of India governor Raghuram Rajan said on Saturday that efforts should be made to make quality higher education affordable and cautioned students to be careful of “unscrupulous schools” that left alumni with high debt and “useless degrees”.
Speaking at the convocation ceremony of Shiv Nadar University, Rajan said while banks must be careful to ensure that student loans were repaid in full, there needed to be concessions for those who fell upon bad times or opted for public service jobs.
“We have to be careful that student loans are repaid in full by those who have the means, while they are forgiven in part for those who fall on bad times or those who take low-paying public service jobs,” Rajan said.
Banks’ bad loans have become a politically sensitive issue after liquor baron and MP Vijay Mallya left the country in March with unpaid debt of Rs 9,400 crore outstanding against his now defunct aviation company. Experts fear the scale of the bad debt problem could be larger than publicly known. Middle-class students commonly obtain hefty loans to fund higher educational aspirations.
Rajan said even while inequality between countries was diminishing, inequality within countries was rising and that free market was not “fair”, saying even well-run market economies seemed to be favouring those who already had plenty.
“This is because skills and capabilities have become much more important in well-paid jobs, and those born in good circumstances have a much better chance at acquiring these… the income inequality is on the rise, with some having colossal incomes and others worrying about the next meal,” he said.
The governor said providing access to schooling and health care for all, a non-discriminating job market with many jobs, equal opportunities for further advancement regardless of gender, race or background would be crucial to restore faith in markets.
He said making it easy for Dalits to start businesses might do more for their social status because money empowered more than affirmative action. “Rather than prohibiting the use of money and wealth, let us think about increasing society’s tolerance for its use,” Rajan said.