‘DeMo, GST crip­pled growth’

Sunday Express - - FRONT PAGE -

IN­DIA was grow­ing at a faster pace be­fore de­mon­eti­sa­tion and GST roll­out and 7 per cent might not be enough to meet the coun­try’s needs, for­mer RBI gov­er­nor Raghu­ram Ra­jan said.

“Seven is not enough for the kind of peo­ple com­ing into the labour mar­ket and we need jobs for them,” he added.

Speak­ing at an event at the Uni­ver­sity of Cal­i­for­nia in Berke­ley, Ra­jan pointed out that In­dia grew at a higher rate for four years — 2012 to 2016 — be­fore the Naren­dra Modi-led govern­ment un­leashed the two dis­rup­tive moves.

“The two suc­ces­sive shocks of de­mon­eti­sa­tion and GST had a se­ri­ous im­pact on growth in In­dia. Growth has fallen off in­ter­est­ingly at a time when growth in the global econ­omy has been peak­ing,” Ra­jan said.

Agree­ing that there are signs of the In­dian econ­omy pick­ing up pace again, Ra­jan said eco­nomic growth is vul­ner­a­ble to sen­si­tive is­sues such as ris­ing oil prices. More so be­cause In­dia de­pends on im­port of oil to meet bulk of its en­ergy needs.

If oil prices go any higher, it could hurt the econ­omy, which has started re­cov­er­ing from the twin blows of de­mon­eti­sa­tion and GST.

Ac­cord­ing to Ra­jan, the In­dian econ­omy has the po­ten­tial to grow stronger and faster. So, in that con­text, a seven per cent growth is not some­thing for the govern­ment to brag about.

“If we go be­low seven per cent, then we must be do­ing some­thing wrong,” he said adding that is the base on which In­dia has to grow at least for the next 10-15 years.

Ra­jan ex­plained that the coun­try to­day faces three ma­jor bot­tle­necks – torn in­fra­struc­ture, stress in the power sec­tor and the bank­ing sec­tor mess.

An­other prob­lem pulling the coun­try down is the ex­ces­sive cen­tral­i­sa­tion of power in de­ci­sion mak­ing, the for­mer top banker noted.

What hap­pened in 2017 is that even as the world picked up, In­dia went down... DeMo and GST have re­ally, re­ally been hard blows

For­mer RBI gov­er­nor Raghu­ram Ra­jan

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