 "Debates on India's progress more important than vishwa guru claims: Rajan")
Former RBI governor Raghuram Rajan, who has often been trolled for his frank views, says ideas and opinions of critics should be attacked but not their motives, as for India's progress listening was more important than preaching like a know-all vishwa guru.
In an interview with PTI, Rajan defended joining Congress leader Rahul Gandhi's 'Bharat Jodo Yatra' saying he very strongly believed in the ideas of national integration and of love, not hate and thought the 135-day foot march was an attempt to make that point.
Rejecting as "just ridiculous" the charge by government backers that he was responsible for some of the mess in the economy that Prime Minister Narendra Modi inherited, he said he had brought down inflation from double digits and had cleaned up the bad debt which the government is taking credit for now.
He also stuck to his comment -- 'India will be lucky if it achieves 5 per cent growth in 2023-24 fiscal year', saying the country was indeed lucky to achieve a 6.5 per cent expansion and he was "very happy" with a faster growth rate.
Rajan, presently Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth, USA, was in India to talk about his new book 'Breaking the mould: Reimagining India's economic future', written jointly by him and Rohit Lamba, assistant professor of economics at Pennsylvania State University.
Rajan said: "You don't just designate an opponent by questioning their motives. Attack their ideas. Don't question their motives. Don't say so and so is anti-national."
According to Rajan, having debates on India's progress is much more important than just sitting and saying 'I know everything, main vishwa guru hun'.
He further said he very strongly believes in the ideas of -- national integration, inclusion, decency in public life, love not hate.
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"I thought that Bharat Jodo Yatra was an attempt to make that point. So I thought it was important to support that idea of India, the idea of India that my parents grew up with," he said.
Rajan emphasised that disadvantaged communities, women will have to be much more included in the process of growth and development of India.
Responding to a question on his last year's comment in which he had said India will be lucky if it achieves 5 per cent economic growth in 2023, Rajan said, "I was absolutely right. We were lucky ... the world grew much more strongly."
To buttress his argument, he said the USA beat its economic growth estimate by three percentage points, adding, "We are now (growing) at may be six and a half (per cent). That is a percentage and a half point more."
Rajan said that he is very happy to see Indian economy growing at faster rate and wants it to accelerate to 8 per cent.
While noting that all economic forecasts have a band of error, he said it is ultimately expectations of what will happen and things work out one way or the other way.
Rajan attributed the sharp uptick in GDP in the first half of the current fiscal to infrastructure spending and good performance by large economies of the world, but added that India has to do a lot of catching up and the USD 5 trillion economy goal for 2025 is nearly impossible.
Rajan further said that even as India's growth rate is strong, private investment and private consumption have not picked up.
He noted that over the last four years, from the pre-pandemic days till today, the Indian economy has grown about 4 per cent a year.
"That is way below our growth potential (economic growth rate) of 6 per cent.
"So you said inflation is contained. One of the reasons inflation is contained is we haven't even grown at our potential rate," Rajan said.
Noting that for democracy to work, the government needs to share the data with the people, he said, "You can not simply pull numbers out of a hat and say...we will be a USD 5 trillion economy by 2025."
According to Rajan, it is virtually impossible for India to become a USD 5 trillion economy by 2025 unless a "miracle" happens.
"Because we are now maybe USD 3.5 trillion economy, to be a USD 5 trillion economy, you have to grow at 12 to 15 per real growth rate over the next two years," he explained.
Rajan wondered whether the government has any plan for increasing India's economic growth from the current 6 per cent-plus to 12-15 per cent.
"So you need some sensible discussion in public...you have to take economists into your conference," he suggested
Replying to a question on his earlier prediction that India is 'dangerously close' to the Hindu rate of growth, Rajan said he was right to worry that India's economic growth had slowed down.
"I think the word 'Hindu rate of growth' was unfortunate because it also created connotations," he said
According to him, it was a technical term, which was used by economist Dr Raj Krishna in 1978 to describe the slow growth of 3.5 per cent.
Rajan observed that Indian economy is faced with the single most important pressure point of job creation.
'must be joking about becoming a developed rich country by 2047...'
India needs to address problems like malnutrition to become a developed nation and also focus on its most important asset of human capital, Rajan said Sunday.
Speaking at an interactive session on a book co-authored by him at the Indian School of Business (ISB) here, he asked how the country can become a developed one when malnutrition is prevalent.
"We are fixated with becoming a developed, rich country by 2047. I use this as an example to say, you must be joking about becoming a developed rich country by 2047 with 35 per cent malnutrition today," he said.
The children who are suffering from malnutrition now would join the labour force 10 years from now, he said.
He also stressed nurturing the human capital in the country by offering appropriate training on a large scale.
"In order to get the medium term right, we have to focus on India's most important asset, its human capital. We have 1.4 billion people more than any other country in the world," he said.
"If we can train a large number of those people well, we have access to so much in terms of value creation. I would say let's start with that. Figure out what's going wrong there and fix it," Rajan said.
Asked whether the banking system which he had started "cleaning up" when he was Governor of RBI got cleaned up or that there is still a lot of work to do, Rajan said, "It's taken a long time, but I actually understand that it's now cleaned up".