Former RBI governor Raghuram Rajan has said that the comparison between India and China is unfair because the latter has upper hand in building infrastructure as there the state owns every asset, while in India there are enormous pushbacks. He said that India’s economic growth, which was 7% for several years, pales only when compared with China.
The reason he gives for China’s economic growth better than India is that the assets are owned by the state and it has the freedom to do whatever it wishes, while so is not the case with India. “In India, the state cannot do the same. The country is so crowded that a new road will run into someone’s backyard and there will be enormous pushback,” Raghuram Rajan told CNBC-TV18.
The star banker whose term as the RBI governor ended just before the implementation of the demonetisation in India spoke candidly on the sudden note-ban which took out 86% of country’s currency out of circulation. He said that any economist would say that if you want to “demobilising 87.5% of the currency, better print it”. He rubbished the idea that currency hoarders would come out post demonetisation as “naive”.
On the implementation of the Goods and Services Tax (GST) and the disruptions caused by it, the Chicago University Professor said that it is not an unfixable issue. “It’ll be nice if we could implement much better than we do. But we can work on it. I wouldn’t give up hope at this point on that,” he added.
Raghuram Rajan was recently embroiled in a controversy over the implementation of a 20:80 gold scheme during his tenure at RBI’s helm, which allegedly benefitted a few players including Mehul Choksi’s Gitanjali Group, which is also found involved in India’s biggest banking scam at the Punjab National Bank (PNB).
While Raghuram Rajan vehemently defended his position on the policy, calling it “objective”, the Central Bureau of Investigation (CBI) questioned some RBI officials over the scheme.