INSUBCONTINENT EXCLUSIVE:
major headwinds that held back country's economic growth last year, former RBI Governor Raghuram Rajan has said, asserting that the current
on Friday, Rajan said for four years -- 2012 to 2016 -- India was growing at a faster pace before it was hit by two major headwinds
"The two successive shocks of demonetisation and the GST had a serious impact on growth in the country
Growth has fallen off interestingly at a time when growth in the global economy has been peaking up," he said delivering the second
Bhattacharya Lectureship on the Future of India
A growth rate of seven per cent per year for 25 years is "very very strong" growth, but in some sense this has become the new Hindu rate of
coming into the labour market and we need jobs for them, So, we need more and cannot be satisfied at this level," he said
Observing that India is sensitive to global growth, he said the country has become a much more open economy, and if the world grows, it also
"What happened in 2017 is that even as the world picked up, India went down
That reflects the fact that these blows (demonetisation and GST) have really really been hard blowsBecause of these headwinds we have been
While the growth is picking up again, there is the issue of oil prices, the economist noted referring to the huge reliance of India on
though the country is recovering from the headwinds of demonetisation and initial hurdles in the implementation of the GST
Commenting on the rising Non-Performing Assets (NPA), he said the best thing to do in such a situation is to "clean up"
It is essential to "deal up with the bad stuff", so that with clean balance sheets, banks can be put back on the track
"It has taken India far long to clean up the banks, partly because the system did not had instruments to deal with bad debts," Rajan
It is the only one element of the larger cleanup plan, he said and called for a multi-prong approach to address the challenge of
As such the seven per cent growth is now being taken granted
"If we go below seven per cent, then we must be doing something wrong," he said adding that that is the base on which India has to grow at
least for next 10-15 years
One is the torn infrastructure, he said, observing that construction is the one industry that drives the economy in early stages
"Infrastructure creates growth," he said
Second, short term target should be to clean up the power sector and to make sure that the electricity produced actually goes to the people
who want the power, he said
excessive centralisation of power in the political decision making, he said
"India can't work from the centre
India works when you have many people taking up the burden
And today the central government is excessively centralised," Rajan said
An example of this is the quantum of decisions that requires the ascent of the Prime Minister's Office, he said.
