Former RBI Governor Raghuram Rajan today said reforms are likely to be put on the shelf till the next general elections but expressed hope that the country will move up to a “higher plane of growth” thereafter. Rajan also raised concerns about employment generation, saying India’s 7.5 per cent growth will not be able create good jobs for the 12 million people coming into the labour market every year. The next general elections are scheduled in early 2019. “I think to some extent, reforms will be put on the shelf till the next election. But post-election, if we can accelerate this pace of reform, there’s no reason why in two or three years we couldn’t move up to a higher plane of growth,” he said in an interview to CNBC.
Rajan, who is currently a professor of finance at the University of Chicago Booth School of Business, further said India can move up from the 7.5 per cent growth, which is not enough to employ the 12 million people coming to the labour force every year in good jobs. “We can move up to maybe 10 per cent, provide some kind of source of demand for the work. We can do that but I think we need to work on it,” he observed.
Rajan noted that reforms are happening in India but more slowly than one would wish. “That’s potentially the cost of getting political agreement,” he said. Noting that the world has become less receptive to exports, Rajan said,” So if India becomes a manufacturing giant overnight, who’s going to buy its stuff? So, India needs to think about its pathway of growth, it will be different from China’s.”