Former Reserve Bank of India (RBI) governor Raghuram Rajan, who joined the Rahul Gandhi-led Bharat Jodo Yatra on Wednesday, said next year will be difficult for the Indian economy as well as for the rest of the world. In a conversation with Rahul Gandhi, Rajan said the Indian economy will struggle to achieve a 5% growth rate next year as key interest rates have gone up and exports have slowed down.
Rajan said that “We would be lucky if we do (grow at) 5% next year. The problem with the 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. “So ideally what you look at before the pandemic, in 2019, and look at now. And if you look at 2022 vis-a-vis, it’s about 2% a year. That’s too low for us.”
When asked about the reason behind the slowdown, the former RBI chief said that the Covid-19 pandemic was “part of the problem”, adding that India was “slowing before the pandemic.” He said the country failed to “generate reforms” needed for growth.
On the issues of growing economic inequality, Raghuram Rajan said the income of the upper middle class increased because they could work from home during the Covid-19 pandemic but those who worked in factories lost their earnings.
“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 and advised that policymakers should consider this class.
He focuses on policies that should be formulated keeping in mind the lower middle class which suffered the most due to the coronavirus pandemic.
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