Raghuram Rajan warns US risks future by curbing foreign students
Former Reserve Bank of India Governor Raghuram Rajan warned about the long-term risks to the US economy if politics eroded the pipeline of international students to American universities.
In an interview with Bloomberg TV Wednesday, Rajan cautioned that foreign student inflows have historically been a cornerstone of US innovation and economic leadership, but that current policies risk unraveling this advantage.
'The Sergey Brins of the world came as students and did wonders for the US economy,' Rajan said, pointing to one of the founders of Google. 'To some extent, the problem is the universities haven't made the case that they are so central to US growth, but also central to the distribution of that growth.'
Rajan, who is professor of finance at the University of Chicago Booth School of Business, warned that squeezing foreign students could impact job growth, noting that companies like Alphabet Inc.'s Google employ thousands, thanks in part to immigration-linked talent pipelines.
At the heart of Rajan's concerns is the ongoing battle between the White House and universities — one that initially centered on elite schools such as Harvard University and Columbia University over antisemitism — but that's morphed into a larger attack over the role of US higher education. On Tuesday, the Trump administration escalated that fight further by ordering US embassies worldwide to stop scheduling interviews for student visas as it weighs stricter vetting of applicants' social-media profiles.
'It is not a great environment,' Rajan said, citing rising fears among academics and administrators over visa security and retaliation from the White House. 'It's an environment which is inhibiting the ultimate production that the universities contribute to the US economy.'
International students accounted for 5.9% of the total US higher education population of almost 19 million. In the 2023-2024 school year, more than 1.1 million foreign students came to the US, with India sending the most, followed by China.
The former central banker also drew a parallel between the decisions foreign students now face and the investment choices businesses make amid uncertainty. 'If uncertainty increases, you tend to either postpone the investment or take it to a place where things are more certain,' he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
13 minutes ago
- Economic Times
What is LRS or RBI's Liberalised Remittance Scheme?
Funds can be remitted outside India for various purposes such as investments, travel, education and more The Reserve Bank of India provides the Liberalised Remittance Scheme. Indian residents can send money abroad. Individuals can remit up to $2,50,000 annually. This is without special permission from the RBI. The scheme is for education, travel, investments, and more. Tax is applicable depending on the purpose of remittance. Tired of too many ads? Remove Ads (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) 1. LRS is a facility provided by the Reserve Bank of India (RBI) that allows resident individuals in India to send money abroad.2. Individuals can remit up to $2,50,000 per financial year (April– March) without special permission from the RBI3. Only resident individuals, including minors (through a guardian), are eligible. The scheme does not apply to companies, partnerships, or trusts.4. Funds can be remitted for various purposes, including education and medical expenses abroad, travel, gifting and donations, investments in foreign stocks, bonds, real estate, and deposits.5. Depending on the purpose, tax collected at source , or TCS, of up to 20% may be applicable on the remitted on this page is courtesy Centre for Investment Education and Learning (CIEL).Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
Time of India
44 minutes ago
- Time of India
Bank investments in MFs soar 91% in FY25 amid subdued lending, surplus liquidity
Chalasani of AMFI expects banks' MF investment interest to be strong as the central bank has changed its liquidity stance from neutral to accommodative, leaving scope for sustained surplus liquidity. Banks' mutual fund investments jumped 91% year on year to Rs 1,19,863 crore as on March 21, 2025, from Rs 62,499 crore on March 22, 2024, data from the Reserve Bank of India (RBI) bulletin showed. Banks' MF investments had grown 28% in the previous year. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Amid subdued lending and surplus liquidity, banks are earning relatively attractive returns from an untraditional source—mutual funds. Bank s' mutual fund investments jumped 91% year on year to Rs 1,19,863 crore as on March 21, 2025, from Rs 62,499 crore on March 22, 2024, data from the Reserve Bank of India (RBI) bulletin showed. Banks' MF investments had grown 28% in the previous non-SLR (statutory liquidity ratio) investments are remunerative treasury operations that banks engage in with surplus funds in the absence of attractive lending opportunities.'Besides suboptimal credit growth, bank investments in mutual funds schemes have gone up due to surplus liquidity conditions, favourable market conditions and relatively faster execution' explained Vinod A N, general manager and treasury head at South Indian Bank Venkat N Chalasani, CEO of Association of Mutual Funds in India (AMFI) and a former State Bank of India deputy managing director, said, 'Most of these investments are in liquid and money market schemes, which is also reflected in the overall mutual fund investment numbers where investments are in zero risk short-term debt instruments such as treasury bills where returns are comparably higher.'AMFI data for MF assets under management (AUM) in March 2025 shows that over 40 % of the funds are parked in liquid schemes. The returns on such investments can go up as high as 7%, while comparable treasury bill yield is around 5.9%Deploying surplus liquidity in MFs for a short-term period helps banks in asset liability management—to execute a bullish interest rate view and higher yield with the benefit of diversification without sacrificing the quality, exports said.'Unlocking of liquidity is relatively better in the form of MF redemption when compared to direct investments,' Vinod MF investments are expected to remain positive in 2025-26, depending on multiple variables like liquidity, interest rate view, credit growth, etc. 'However, repeating the sharp jump (of FY25) is a tall task,' Vinod said. 'I expect moderate growth in MF investment for the rest of FY26.'Chalasani of AMFI expects banks' MF investment interest to be strong as the central bank has changed its liquidity stance from neutral to accommodative, leaving scope for sustained surplus of the restrictive factors, however, is higher risk weights on these investments for banks which is linked to the quarter end investment positions. Hence, a longer trend of bank investments in MFs show a significant amount of pull-outs during the quarter ending period.
Mint
an hour ago
- Mint
Bank loan sanctions to MSMEs for job creation down nearly a third in FY25
Bank loans sanctioned to India's micro, small, and medium enterprises (MSMEs) under the Prime Minister's Employment Generation Programme (PMEGP) dipped by nearly a third to ₹12,315 crore in FY25, from ₹17,759 crore in FY24. The development assumes significance since MSMEs contribute around 29% to India's GDP. This comes in the backdrop of the government reworking its revival framework for MSMEs to ensure continuity of bank credit during their stress period. Launched in 2008 by merging Prime Minister's Rojgar Yojana and Rural Employment Generation Programme, PMEGP is a flagship credit-linked subsidy scheme of the government. Entrepreneurial demand weakens Bank loans sanctioned to MSMEs increased in FY22 in the wake of the covid-19 pandemic, and continued to increase till FY24. From FY22 to FY24, the amount of bank loans sanctioned to MSMEs nearly doubled from a little over ₹9,000 crore to nearly ₹18,000 crore, before falling to FY25 levels of ₹12,315 crore, according to data provided by the MSME ministry. Also Read: Kanpur node is key in UP Defence Corridor for indigenous manufacturing: PM Modi The dip in sanctioned loans also reflected a reduction in the number of businesses seeking credit. The number of businesses which received bank loans under the scheme in FY25 is lower than that in FY22, according to MSME ministry data. In FY25, about 1,08,923 MSMEs received loans from banks under the PMEGP, less than FY22's 1,09,127, after peaking in FY24 with 1,65,725 businesses, the data showed. Global uncertainty is likely to have doused entrepreneurial sentiment for smaller businesses in FY25, banking experts said. MSME growth is driven by domestic and global macroeconomic environment, said Vivek Iyer, partner and financial services risk leader, Grant Thornton Bharat. "FY25 has been categorized with many uncertainties ranging from geopolitical stress points in west Asia, the Russia Ukraine conflict, Sino-American rivalry, the impending US election outcome and then the subsequent outcome of the US election. When sentiment is poor, demand to start ventures is poor and hence demand for credit is poor," he said. Also Read: India remains fastest-growing economy for fourth year straight: FM Sitharaman Iyer clarified that banks had not changed their assessment criteria for MSME loans, highlighting that the dip in sanctioned bank loans is a demand-side issue, and not a supply-side problem. Access to finance still a hurdle The key objective of the PMEGP was to aid micro enterprises of self-employment ventures to provide employment to artisans and youth in both rural and urban regions. The intention of the scheme was to curb the migration of youth from rural to urban regions, the MSME ministry annual report for FY25 said. Under the scheme, the central government provides a part of the capital required to start a venture. Nearly one million micro enterprises have been assisted since the inception of the scheme till December 2024 with aid of ₹26,124 crore, providing estimated employment opportunities to over 80 lakh people, the MSME ministry FY25 annual report said. Lack of access to capital has been a key hurdle in MSME growth in India. A study by Niti Aayog and the Institute for Competitiveness in May 2025 cited Reserve Bank of India (RBI) data to show that MSMEs continued to have a small share of the credit to businesses deployed by 41 scheduled banks from 2020 to 2024. Also Read: Govt relaxes rules to boost GST registration among small businesses In September 2020, 14% of all credit deployed by these banks went to micro and small enterprises, while 4% went to medium enterprises. The situation improved by September 2024, when 20% went to micro and small enterprises, and 9% went to medium enterprises. The share of credit deployed to large businesses, however, still remained 71% in 2024, according to the data. In a 2022 World Bank Enterprise Survey, over a fifth of Indian MSMEs said access to finance is their biggest obstacle.
