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Raghuram Rajan on chip subsidy: Former Reserve Bank of India (RBI) chief Raghuram Rajan has issued a note on LinkedIn on Saturday night. In this he gave his reaction to the comments coming regarding an interview given to a news agency.
Rajan said India's policy of spending more on subsidies for chip manufacturing than the annual budget for higher education is simply not right. Rajan, a professor of finance at the University of Chicago Booth School of Business, wrote that 'This is definitely not the right way to become a developed country. It doesn't matter what my troll friend says'
Jumping into chip manufacturing sector will prove disastrous
, Rajan also said that India should never get into chip manufacturing. Undoubtedly every country tries in this way. Now joining such a race would be a disastrous race. Recently, in an interview given to Bloomberg, Rajan said something which caused controversy. In this interview, he criticized the Indian government and said that instead of improving the education system, India is focusing more on high profile projects like chip manufacturing.
Rs 76,000 crore spent as chip subsidy
Last month, India approved 3 semiconductor plants under its ₹76,000 crore ($10 billion) chip subsidy scheme. Out of the total investment of Rs 1.26 lakh crore in these three facilities, an estimated Rs 48 thousand crore ($5.8 billion) will be given as subsidy by the central government.
Rajan has written that actually chip subsidy means capital subsidy. This is to be paid upfront and not product based (unlike PLI). If the government claims that India will soon produce chips, it believes that this will increase capital subsidies.
If all goes well the result will be 28nm chips. Modern cell phones have an ultra-modern chip of 3 nm. If we want to become a global chip manufacturer, we will have to subsidize several generations of chip factories to reach this goal, and the size of subsidies will continue to grow. Because modern chips manufacturing technology is very expensive.
