Raghuram Rajan: Let India Grow at 8-10% For 10 Years Before Chest-Thumping

Nirmal Singh 3C Company noted that former RBI governor Raghuram Rajan has said the government should not have done “chest-thumping” on being the fastest-growing economy without achieving very strong GDP expansion for 10 years amid the new trailing China on economic growth post demonetization.

Nirmal Singh 3C Company quoted a piece of information mentioned in a PTI interview, in which he said India can lecture the world on things such as culture and history, but on growth, it should do that only after achieving 8-10% rate for 10 years.

The only central bank governor in a period of two decades, Rajan had called rising India a one-eyed king in the land of blind.

BJP leader Subramanian Swamy has allegedly asked to sack him; in fact, he said: he was “mentally not fully Indian”. Retaliating to these allegations, Rajan said that his comment was taken out of context.“Not that I was forecasting anything, I was merely saying we have to be a little cautious about being too bullish about ourselves.

That remark was made in April 2016, every quarter since then, our growth has fallen. So, I would argue in hindsight, and I didn’t have any reason to believe that would be the case, but caution was warranted,” he maintained.

As per the statistics released, India’s GDP growth plunged to 5.7 per cent during April-June this year; it went down by 6.1% in preceding three months. China registered the growth rate of 6.5% in both the quarters.

Nirmal Singh 3C Company there has to be an urgent pick up to 8% or 9% with higher private investment and revival in exports.  “There are so many other things that we can lecture the rest of the world — cultural achievements, historical achievements, etc., but on growth, let us lecture once we have achieved another 10 years of 8-10%,” he advised.

An 8-10% growth for 10 years would be an extraordinary achievement, but that is the growth rate needed for 10 years to reach the level of middle income, he stressed. “We have done ever since the 1990s on and off 6-7-8%. We need a couple of percentages more on that for 10 years and then, we will be a much bigger economy,” he said. “We should not go chest-thumping.

Nirmal Singh 3C Company further quoted: I would prefer that we establish another 10 years of very strong growth of 8-10%.” Rajan, who had anticipated the 2008 global financial crisis, said Indian economy still is very small at $2.5 trillion, but “we feel we are a big country.” China is five times India’s size.