"Government Thinks Only Those Who Clap...": Raghuram Rajan On Critics | Read

PUBLISHED ON: August 2, 2022 | Duration: 28 min, 28 sec

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The global economy is in big trouble. The IMF has slashed its forecast for global growth this year to 3.2 %. The world's economic growth had rebounded to 6.1% in 2021, but 2022 will see a major slowdown. The United States is on the verge of a recession. China's economy has slowed down. In our neighbourhood, Sri Lanka's economic crisis is there for the world to see. Pakistan is facing record high inflation. The UK is facing a massive cost-of-living crisis, which has turned into a political issue for voters. The headwinds are here in India too and we can all feel it. India has been battling inflation, a falling rupee, and high unemployment. Despite all this, Finance Minister Nirmala Sitharaman has emphatically told the Parliament that India is doing better when compared with the rest of the world. She has said there is no question of India going into recession. So, what is the economic outlook for India? Joining us now is economist and former RBI Governor Raghuram Rajan. 

Highlights

  1. Certainly we have higher growth than many economies in the world, question is what level of growth we need because we are a poor country.
  2. In the last few years, growth has been insufficient for the kind of jobs we need.
  3. Can we rest? Absolutely not. We need to do more. We need more growth.
  4. This 7% is partly a rebound from pretty bad rates a few years ago. But I don't think 7% is something to be sneered at.
  5. There are no shortcuts here. We have to increase the skill base and education of our people.
  6. We are in grave danger for the generation that graduates out of schools over the next 10 years.
  7. If we can create the skill base, the jobs will come.
  8. Let the rupee do what it will. Once inflation is under control, the rupee will find its level, given our level of exports.
  9. In general, at least looking forward, there is some hope inflation will come down.
  10. I would say there is a different reason to say 'we are going the Sri Lanka way' than our economic situation. We are far from that. But I would say on another element, which is the issue of minorities and their place in the nation. Sri Lanka certainly had a large minority – the Tamils. And when they had a problem of jobless growth, politicians found it particularly easy to deflect some of the attention to the problem of minorities and made a bogeyman out of the minorities. Essentially creating the strife that resulted in civil war.
  11. On how does communal strife affects economic climate: People worry. First they think of consequences down the line.
  12. We are not there yet. We are some distance away from that, but it is something we should start worrying about given the kind of fuel that is being fed to this fire by some politicians.
  13. The other thing they think about is 'do I really want to do business with a country which mistreats its minorities?'
  14. When you look at China and what they have with the Uyghurs, they have got a lot of pushback from Europe and US. There are sanctions on goods that are produced there. There are also increasing motions by shareholders saying they want to stop doing business in these areas.
  15. Civil society also plays a role and it is important to have an image of a tolerant, respectful democracy.
  16. On is India a liberal democracy: I would say less so than 10 years ago.
  17. I would say that if we can do the right things, we can certainly restore what we have lost but the further you go down this road, the harder it becomes.
  18. In the last few years, you have seen a number of decisions without wide consultation. Demonetisation for example. Now you couldn't have had wide consultations. There are others – farm bills for example. In a democracy, it works when you have a dialogue. It need not be an endless dialogue.
  19. It was interesting, the word 'critic'. I try to offer a balanced view but balance also often requires criticism.
  20. There is a view from this government that only those who constantly clap are in the right because the government does no wrong. Every government does wrong.
  21. I have criticised the UPA government when I was not part of the establishment and I have worked with the previous NDA government. I have no reason to be excessively critical. At the same time, some criticism is warranted.
  22. So don't label people who offer some criticism as critics.
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