Reserve Bank of India governor Raghuram Rajan has a message for the government: Encouraging something is the “surest way of killing it.”

In a speech on March 12, the central banker said that the state should simply focus on enabling business activities in the country, instead of trying to control their end results. Once an ideal environment has been created, “then let our myriad entrepreneurs figure out what new and interesting businesses they will create,” he added.

To illustrate his point, Rajan talked about the Indian government’s unwitting role in the creation of the country’s booming software industry.

The Indian Institutes of Technology (IITs) were set up by India’s first prime minister Jawaharlal Nehru. In those days, the objective of these institutes was “to provide scientists and technologists of the highest calibre who would engage in research, design and development to help building the nation towards self-reliance in her technological needs,” according to Nehru.

But, instead of living up to these lofty aims, IITs, in the 1990s, “supplied managers and programmers to body shops focused on dealing with the Y2K bug,” said Rajan at the Ramnath Goenka Memorial lecture in Delhi.

These “body shops” later “evolved into our world-beating software giants,” he added. Rajan, an IIT Delhi alumnus himself, was seemingly referring to companies such as Infosys and Tata Consultancy Services, among others, which have become stars in the global IT services sector.

Here is an unedited excerpt from his speech: