Raghuram Rajan says Indian economy dangerously close to slowing down what is Hindu rate of growth Modi govt latest news
Former Reserve Bank of India (RBI) Governor Raghuram Rajan said India is “dangerously close” to the Hindu rate of growth, after GDP slowed to 4.4 percent in the third quarter of the current fiscal. In Rajan’s view, private sector investment, high-interest rates and slow global growth are factors affecting the economy.
In an interview with PTI, Raghuram Rajan said, “Of course, optimists will point to an upward revision in the previous GDP numbers, but I am worried about a sequential slowdown. With the private sector unwilling to invest, the RBI is still raising rates. , and global growth is likely to slow later in the year, I’m not sure where we find the additional growth momentum.”
“I worry that at first we will be lucky if we hit 5 per cent growth. The latest October-December Indian GDP data (4.4 per cent year-on-year and 1 per cent quarter-on-quarter) has slowed growth from key figures. suggests. In the first half of the year,” Rajan added.
“My fears were not misplaced. The RBI has projected a lower 4.2 per cent for the last quarter of this financial year. Currently, the average annual growth for the October-December quarter is comparable to the pre-pandemic quarter of 3 years ago. 3.7 percent,” he said.
“This is dangerously close to our old Hindu growth rate! We must do better.”
What is Hindu growth rate?
Hindu growth rate is a term that refers to the low Indian economic growth rate from the 1950s to the 1980s, which averaged 4 percent. The term was coined by an Indian economist, Raj Krishna, in 1978 to denote slow growth.
However, Rajan said the government is playing its role on the infrastructure front but its manufacturing sector is yet to grow.
Rajan said the bright spot is adding services meanwhile, “it seems less central to the government effort.”
Speaking on the government’s Production Linked Incentive (PLI) scheme, Rajan said, “…a sensible assessment would ask how many jobs are being created and at what cost per job.”
“Similarly, government spokesmen point to the increase in cell phone exports as evidence that the scheme is working. But if we’re subsidizing every cell phone that’s exported, that’s an obvious consequence. Key questions That is how much value has been added to it. India. It has turned out to be very little so far,” he said.
“Besides, we have also spent money on subsidies. Foxconn has just announced a big factory to make parts but they have been saying for a long time that they will invest. I think we will see the success of the PLI scheme. A lot more evidence is needed before we can celebrate,” Ous said.
“We need to work on both manufacturing and services to create the jobs we need, and fortunately, many inputs (services and manufacturing) both require schooling, skills…,” he said.
Raghuram Rajan also pointed out that most of the world’s developed economies are mostly service economies, therefore, India can become a large economy without becoming a major manufacturing hub.
(With inputs from PTI)
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