Synopsis: Raghuram Rajan, the former RBI Governor, challenges India's reported GDP growth figures, asserting that they may be inflated. He advocates for sustained growth rates of 9-10% to achieve developmental goals by 2047.
The former RBI chief highlighted that India's true GDP growth lies between 6 to 6.5 percent, dismissing the 8.5 percent figure as inflated.
Raghuram Rajan emphasized that to achieve developed status by 2047, sustained growth rates of 9-10% are imperative.
He shared these insights during a discussion at Northwestern University's Kellogg Business School alongside Krishnamurthy Subramanian, India's former Chief Economic Advisor.
Rajan expressed skepticism towards India's reported growth figures, questioning the absence of corresponding inflation.
He attributed this anomaly to India's surplus labor in agriculture rather than in sectors like manufacturing or services, where productivity is higher.
Highlighting concerns about the labor market, Rajan pointed out a lack of growth in labor-intensive manufacturing sectors post-pandemic.
He cited sluggish demand in segments like two-wheeler sales despite an apparent surge in passenger car purchases.
Rajan portrayed India's economy as multifaceted, with one facet showcasing growth opportunities like foreign investments and another revealing challenges faced by the middle and lower-middle class, particularly in terms of employment.
In conclusion, Raghuram Rajan's analysis underscores a nuanced view of India's economic growth, suggesting that reported figures may not accurately reflect the country's true potential.
He argues for sustained high growth rates to achieve developmental goals, highlighting concerns about employment, labor productivity, and uneven economic performance across sectors.
Rajan's insights emphasize the need for comprehensive policy measures to address the underlying structural issues hindering India's path to inclusive and sustainable growth.
