On Wednesday, former Reserve Bank of India (RBI) governor Raghuram Rajan walked with Congress leader Rahul Gandhi during the Bharat Jodo Yatra as it began from Bhadoti area of Sawai Madhopur in Rajasthan and reached Badshahpura for a morning break. Tweeting a photo with Rajan, Rahul Gandhi wrote, “Freedom is the essence of Democracy & Harmony is the foundation of a prosperous Economy. We walk for unity and to secure India’s future.”
Later, Gandhi posted a video on his YouTube channel of his interaction with the former RBI governor, which showed the two engaged in a free-wheeling conversation about economy, growing income inequality, growth potential of some sectors, among other issues.
When Rahul Gandhi asked Rajan about his views on the economy, he replied, “The next year is going to be difficult. This year has been difficult with the war, and all that. Because growth is going to slow in the world… people are raising interest rates… That brings down growth. India is also going to be hit. Indian interest rates have also gone up but Indian exports have been slowing quite a bit. And India’s inflation problem is more a commodity inflation problem… vegetable inflation problem… and that is also going to be negative for growth. So, I think that we would be lucky if we do 5 per cent (growth) next year.”
Rajan, who exited the RBI in September 2016, further said, “The problem with the growth numbers is that you have to understand what you are measuring with respect to. If there was a terrible quarter last year and you are measuring with respect to that, you look very good. Ideally, what you do is look before the pandemic in 2019 and look at it now… And if we look at 2022 vis-a-vis 2019, it is about 2 per cent a year. That is too low for us,” Rajan says.
When Rahul asked what he attributes that to, Rajan replied saying “pandemic”.
“Pandemic was part of the problem. But, we were slowing before the pandemic. We had gone from 9 to 5 per cent. And we haven’t really generated reforms, which will generate growth,” Rajan said.
Rahul then raised the issue of income inequality, questioning why some people kept getting richer while a part of the population got poorer.
“This is a big problem. It is not only about the industrialists. The upper-middle class, their income rose during the pandemic, as they could also work from home. The poor had to go to the factories. And once the factories shut, their income stopped too. This divide rose during the pandemic. The poor got ration during the pandemic, the rich did not suffer,” Rajan says.
“The lower-middle class were the worst hit. They were laid off, unemployment rose, debts increased, interest rates have also risen. We need to look at them now, and the policies that we make, need to be made for them because they have been the worst affected,” he added.
“Also, this concentration of wealth among the industrialists that you (Rahul) talk about, this needs to be addressed. We can’t be against capitalism, but we also need to ensure that we promote competition,” Rajan said.
Rahul added, “we can be against monopoly,” as Rajan went on, “all businesses are good for the country. Small businesses are good. Big businesses are also good. But monopoly isn’t good.”
The Rahul Gandhi-led Bharat Jodo Yatra which began on September 7 from Kanyakumari in Tamil Nadu, will complete its 100 day on Friday. The Yatra has so far crossed Tamil Nadu, Karnataka, Maharashtra, Andhra Pradesh, Madhya Pradesh and is ongoing in Rajasthan.