"We need the right kind...Not too much, not too little, but clever and sensible regulations. Not just the regulations in the book, but also the enforcement to make sure that businesses have chance to succeed in away that promotes growth and create jobs," he said at the 58th annual general meeting of Indo-German Chamber of Commerce here.
Although the country has enough regulations, not all of them are of the right kind, he said.
"We need financial system that give access to all. (Financial) exclusion (of people) is bad in many ways - one they don't have access and second they cannot save in the financial system which can force them to save outside at a greater risk, and at times at a substantially low returns."
He emphasised on providing better education and skills to the working age population. "We need broad level skills across the population, which means we have to improve the quality of education."
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"Unfortunately, the direct interventions have had only moderate effects...Intervening directly with poor households and providing nutritional supplements has had moderate effects because some people argue it is more than just that."
Rajan further said one of the bigger challenges for India is how to take advantage of its demographic dividends.
"Of course, as many have noted that a demographic dividend can turn into demographic curse if we don't create jobs. So what's important is we reap the benefits of demographic dividend by creating jobs," he added.