De­mon­eti­sa­tion, GST hold back In­dia’s growth: Ra­jan


Hindustan Times ST (Jaipur) - - Front Page - Press Trust of In­dia let­ters@hin­dus­tan­

De­mon­eti­sa­tion and the Goods and Ser­vices Tax (GST) are the two ma­jor head­winds that held back In­dia’s eco­nomic growth last year, for­mer RBI Gov­er­nor Raghu­ram Ra­jan has said, as­sert­ing that the cur­rent seven per cent growth rate is not enough to meet the coun­try’s needs.

Ad­dress­ing an au­di­ence at the Univer­sity of Cal­i­for­nia in Berkley on Fri­day, Ra­jan said for four years -- 2012 to 2016 -- In­dia was grow­ing at a faster pace be­fore it was hit by two ma­jor head­winds.

“The two suc­ces­sive shocks of de­mon­eti­sa­tion and the 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 up,” he said de­liv­er­ing the sec­ond Bhat­tacharya Lec­ture­ship on the Fu­ture of In­dia.

A growth rate of 7% per year for 25 years is “very very strong” growth, but in some sense this has be­come the new Hindu rate of growth, which ear­lier used to be three-and-a-half per cent, Ra­jan said.

“The re­al­ity is that seven is not enough for the kind of peo­ple com­ing into the labour mar­ket and we need jobs for them, So, we need more and can­not be sat­is­fied at this level,” he said.

Ob­serv­ing that In­dia is sen­si­tive to global growth, he said In­dia has be­come a much more open econ­omy, and if the world grows, it also grows more.

“What hap­pened in 2017 is that even as the world picked up, In­dia went down. That re­flects the fact that th­ese blows (de­mon­eti­sa­tion and GST) have re­ally re­ally been hard blows... Be­cause of th­ese head­winds we have been held back,” he said.

While In­dia’s growth is pick­ing up again, there is the is­sue of oil prices, the econ­o­mist noted re­fer­ring to the huge re­liance of In­dia on im­port of oil for its en­ergy needs.

With the oil prices go­ing up,


Newspapers in English

Newspapers from India

© PressReader. All rights reserved.