India will struggle to attain 5% growth rate next year: Raghuram Rajan

Former Reserve Bank governor Raghuram Rajan who joined Rahul Gandhi’s Bharat Jodo Yatra in Rajasthan on Wednesday (December 15), said it would be difficult for India to reach a growth rate of even 5 per cent next year owing to a rise in interest rates and dip in exports.

Also read: Raghuram Rajan joins Rahul Gandhi at Bharat Jodo Yatra

“We would be lucky if we do (grow at) 5 per cent. See the problem with growth numbers is that you have to understand what you are measuring with respect to. If you had a terrible quarter last year and you are measuring with respect to, you look very good,” Rajan said.

“So ideally what you is look before the pandemic, in 2019, and look at now. And if you look at 2022, vis-a-vis, it’s about 2 per cent a year. That is too low for us,” he said.

In a casual chat with Rahul after the foot march at Sawai Madhopur, Rajan said while the economy was already sluggish when the COVID-19 broke out, the economic distress brought by the pandemic further crippled it. He said the country’s failure to “generate reforms” needed for growth was an additional factor behind the slump.

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He said the pandemic widened the economic divide between the upper middle class and the lower middle class, as while the former could work from home, the latter literally lost out on work.

“So, this divide increased during the pandemic. Rich had no problem, the lower class got ration and other things but the lower middle class had a big damage. There were no jobs, unemployment increased,” he said.

Rajan stressed the government must make policies which concentrate on the needs of the lower middle class which bore the brunt of the pandemic.

The BJP took a dig at Rajan for participating in the foot march, stating that his comments on Indian economy should be “discarded” and “distained”.

Calling Rajan’s depiction of Indian economy “coloured and opportunistic,” BJP leader Amit Malviya in a tweet said the ex-RBI governor “fancies himself as the next Manmohan Singh.”

Also read: Raghuram Rajan lauds RBI for increasing forex reserves

“One former RBI governor became head of government and country lost 10 precious years. Thanks to Modi, India will not repeat that mistake. RRR (Raghuram Rajan) can walk from Delhi to Chicago,” tweeted Vijay Chauthaiwale, the BJP’s foreign affairs department head.

In a quick rebuttal, Congress leader P Chidambaram said that it stings the BJP to see Rajan discussing about the economy with Rahul because Prime Minister Narendra Modi himself doesn’t meet economists.

“Why is the BJP outraged by Rahul Gandhi having a conversation with Raghuram Rajan? Because PM Modi does not meet economists and economists have no access to PM Modi,” he said.