Former RBI governor Raghuram Rajan said that in the first half of the current fiscal year, the sharp increase in GDP is attributed to infrastructure spending and performance of large economies of the world. Rajan further said that even as India’s growth rate is strong, private investment and private consumption have not picked up.
He said that India has to do a lot of catching up and the USD 5 trillion economy goal for 2025 is nearly impossible.
Former RBI governor said that the other reason for this very strong growth in the first half is government spending on infrastructure. India retained the tag of the world’s fastest-growing major economy, with its GDP expanding by a faster-than-expected rate of 7.6 per cent in the July-September quarter on booster shots from government spending and manufacturing.
At constant (2011-12) prices in April-September 2023-24 (H1 2023-24), GDP is estimated at Rs 82.11 lakh crore as against Rs 76.22 lakh crore during the corresponding period of the previous year, showing a growth of 7.7 per cent in H1 2023-24 as against 9.5 per cent in H1 2022-23.
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,” he added.
The eminent economist emphasised that India needs to grow much faster as the worrying fact that the growth is not providing enough jobs. He stresses for faster economic growth, particularly in creating jobs. He urged the government to engage in transparent discussion and involve economists to formulate plans to boost the growth.