‘We would be lucky if…’: Raghuram Rajan to Rahul Gandhi on Indian economy

Former Reserve Bank of India (RBI) governor Raghuram Rajan, who joined Rahul Gandhi-led Bharat Jodo Yatra on Wednesday, said next year will be difficult for the Indian economy as also 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. ( Watch | Ex RBI governor Raghuram Rajan joins Rahul Gandhi at Bharat Jodo Yatra)

"We would be lucky if we do (grow at) 5% next year. See 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," 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% 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 challenges 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 suggested that policymakers should consider this class.

He stressed that policies should be formulated keeping in mind the lower middle class which suffered the most due to the coronavirus pandemic.

The BJP took a swipe at Rajan over his joining the Congress foot march in Rajasthan and said his commentary on India's economy should be discarded with "disdain" as it is "coloured and opportunistic".

The BJP's foreign affairs department head Vijay Chauthaiwale tweeted, "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."

Congress hit back saying the entire cabinet put together cannot match the abilities of the economist.

Reacting to BJP's criticism, senior Congress leader P Chidambaram tweeted, "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."