Better to under-promise and over-achieve, says Rajan on GDP growth
Former RBI governor Raghuram Rajan on Tuesday said it is always better to underpromise and over-achieve than to face awkward questions when it comes to growth comparisons with China.
Rajan, the only central bank governor in two decades who did not get a second term, also seemed to defend his controversial remark of India being a ‘oneeyed king in the land of blind’, saying GDP expansion slipped in every quarter since that remark in April of last year.
India has a lot of potential and is capable of doing significantly more but should not get complacent, he added. “This notion that, we at every corner, we have to say we are the best and there is no body else like us. Well that is not true, first. There is lot of potential in India, we are capable of doing significantly more over the years to come. Let us be confident, we can do it. Let us do it. But let us boast only after we have achieved it. Let us not be overly complacent before that,” he said at an event here to mark his book launch.
India’s GDP growth slowed to 5.7% during the April-June quarter, down from 6.1% in the preceding three-month period. China clocked 6.5% growth rate in both the quarters.
Replying to a question on demonetisation, Rajan said “the jury in terms of data is still out”.
“We still have to wait for the full evolution of data to understand what exactly the cost and benefits have been. It may be that we never know because we do not measure some of the areas where demonetisation had impact because those were part of informal economy.
He, however, said the cost of demonetisation has been quite substantial. “What (the impact) is because of demonetisation, what is because of banking sector stress, what is because of anticipation of GST...all three are happening at the same time. So I don’t think you can pinpoint and say exactly this much but analysts have made an estimate -- 1% and 2% of GDP in terms of the growth cost,” said the former RBI governor.
He added that he worked under two governments and there was absolutely no interference.