India’s Growing Fast, But Still a Long Way to Go, Says Rajan
Reserve Bank chief criticises bid to get to literal meaning of every phrase uttered by public figures
Pune: RBI Governor Raghuram Rajan cautioned that being the world’s fastest-growing major economy shouldn’t breed complacency, setting in context his remark that “in the land of the blind, the one-eyed man is king”. The latter comment, made recently in the US about India’s growth in the backdrop of global economic uncertainty, appears to have hit a political nerve.
“Growth… is just one measure of performance,” Rajan told students graduating from NIBM in Pune on Wednesday. “The level of per capita GDP is also important. We are still one of the poorest large countries in the world on a per capita basis, and have a long way to go before we rea- sonably address the concerns of each one of our citizens.”
He compared the country’s record with that of its northern neighbour, the world’s fastest-growing economy until being overtaken by India.
ON PER CAPITA INCOME
“We are often compared with China. But the Chinese economy, which was smaller than ours in the1960s, is now five times our size at market-exchange rates,” he said. “The average Chinese citizen is over four times ri- cher than the average Indian. The sobering thought is that we have a long way to go before we can claim we have arrived.”
As head of RBI, he needed to have a clear-eyed, non-triumphalist view. “As a central banker who has to be pragmatic, I can’t get euphoric if India is the fastest-growing large economy. Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years,” Rajan said. “We cannot get carried away by our current growth superiority, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing… This movie has played too many times in India’s past for us to not know how it ends.”
He also made the point that attempting to get to the literal meaning of every phrase uttered by a public figure would stifle debate.
“My intent was to signal that our outperformance was accentuated because world growth was weak, but we in India were still hungry for more growth,” Rajan told the students.