“We Will Be Lucky If We Get 5% Growth Next Year”, Says Ex RBI Governor Raghuram Rajan

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WATCH: 'We'll be lucky if we get 5% growth next year,' says Raghuram Rajan

Many of our small companies don’t grow, says former RBI Governor Raghuram Rajan. (file)

New Delhi:

Former Reserve Bank of India Governor Raghuram Rajan says he believes the country will be lucky to achieve 5 percent growth next year.

The former governor also said that next year is going to be tougher than this. “Obviously, there were a lot of problems with this war and all that. Growth in the world is slowing down. People are raising interest rates which slows down growth,” he said.

While talking to Congress leader Rahul Gandhi, the former governor said Reserve Bank of India “India is also going to be hit. Indian interest rates have also gone up but Indian exports have slowed quite a bit,” he said.

“India’s inflation problem is more about commodity inflation problem, vegetable inflation problem. That is also going to be negative for growth,” he said in a frank discussion with Rahul Gandhi on Wednesday.

“I think we’ll be lucky if we can do 5 percent next year,” the economist said.

The problem with growth numbers is that you have to understand what you’re measuring, he said. “We had a terrible quarter last year. And, by the respect you measure it, you’re looking pretty good. So ideally what you do is look before the pandemic in 2019 and look now.”

“If you look at 2022 compared to 2019, it’s about 2 percent a year. That’s too low for us,” he said.

When asked by Rahul Gandhi what caused this, he said, “The pandemic was part of the problem but before the pandemic we were slow. We went from 9 to 5. And, we didn’t really create reforms that would create growth.”

Rahul Gandhi asked him: “One thing is happening, 4-5 people are getting rich and they can go into any business and the rest of the people are left behind. The farmers, the poor have formed a new India. The dreams of these 4-5 people are fulfilled the dreams of the rest.” .What should we do about this inequality?

“It’s a big problem. It’s not about industry,” the economist said. “The upper middle class benefited because they could work during the pandemic where the poor had to go to factories and the factories were closed. The pandemic,” he said. “This divide has grown during the pandemic,” he added.

Economist Raghuram Rajan said, “The poorest can get rations. They get everything. These rich people are not disadvantaged. Those — the lower middle class — have a lot to lose. They’ve lost their jobs. Unemployment is up. Debt is up. We’re on them. should look. Because they have suffered a lot.”

Regarding the concentration of wealth among industrialists, he said, we should also look at them. He said, “We cannot be against capitalism. But we should fight for competition. We can be anti-monopoly. Monopoly is not good for the country.”

He said, India’s issue was that our exports will also decrease and growth will also decrease. “Technical assistance needs, loans should be sure about the policies.”

He said, there may be changes. “If banks know that small businesses have good sales and stable revenue streams, they can lend, but we need to collect and make that information available. It’s happening now. They’re starting to think about all this in the fintech revolution. Now. But in India, it’s There needs to be 10 times that,” he added.

Many of our small companies don’t grow. They need a way to grow, he said.

“The problem here is, they are used to some of the advantages of being small. If you don’t pay taxes, the officers won’t come to them. They are under the government’s radar scan instead of getting help from the government.”

“You (company) stay under the radar until you get a revenue stream. Once your business grows, it should be like, I’m going to see you, I’m going to help you. I’m not going to tax you or take over your life,” he said. To make it miserable. We need that situation.”

He also said that as soon as these businesses become good, the government takes away those benefits. “There is no incentive to grow. Why not say, if you grow, you get this incentive for five years? When they grow, they don’t care,” added the economist.

(Except for the headline, this story was not edited by NDTV staff and appeared on a syndicated feed.)

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