Raghuram Rajan, the former RBI governor known for his candid personality that continues to make him quite popular in India even after leaving the office in 2016, has said that 7.5% growth rate is not enough for employing 12 million people in the country. He said that India has the potential to grow at 10%, but that would require a lot of work.
The recent comments by Raghuram Rajan in an interview with CNBC-TV18, in short, transpires to the fact that Narendra Modi can do better. He said that reforms in India are happening but more slowly than one would wish. “We can move up to maybe 10%, provide some kind of source of demand for the work,” he said in the interview.
Here are top comments from Raghuram Rajan’s latest interview:
Election mode on; reforms likely gone!
“Reforms are likely to be put on the shelf until the next general elections,” Raghuram Rajan said. India is entering into a poll-bound financial year and it is a popular belief that with the impending General Election in 2019, there would be fewer reforms and more populist measures.
7.5% growth good but not enough for good jobs
“India’s 7.5% growth will not be able to create good jobs for the 12 million people coming into the labour market every year,” he said. India had slumped to a three year low of 5.7% in the first quarter of FY18, but disruptions caused by demonetisation and the implementation of the GST are phasing out and India is expected to grow to 7.5% in next two years. But Raghuram Rajan has said it is not good enough. The World Bank also noted the same in a half-yearly report on India’s growth.
Raghuram Rajan said that reforms in India are happening at a slow pace. Even as India is entering into the poll mode, and that reforms will be put on the shelf until the next election, he said that if India accelerates its pace of reform, there’s no reason why in two or three years higher plane of growth could not be achieved.
India, China – not same
The former RBI governor said that China’s economic growth boom on the back of its manufacturing industry and cheaper goods cannot be replicated in India. He said that world has become less receptive to exports, and asked that even if India becomes a manufacturing giant overnight, who’s going to buy its stuff?