Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday praised the ‘wise’ Indian voters for electing a strong Opposition, and labelled the election results as a ‘win for Indian democracy and a win for the economy’.
In a LinkedIn post, he attached a paper and said, “India needs to change its economic course. That is less likely if the Bharatiya Janata Party wins with an overwhelming majority because the party will see victory as an affirmation of its policies.”
“Regardless of what happens over the next few days, we will have a strong opposition that forces the government to change course,” Rajan said.
In the attached paper, he credited Prime Minister Narendra Modi for having advanced the Indian economy in his 10-year tenure. However, he pointed out that the Indian economic growth has been a mixed bag for the average Indian.
He praised the Modi-led government for advancing India’s physical and digital infrastructure, and space missions, however, pointed to many ‘flaws’ in the administrative policies of the government.
”When China and Korea were similarly young and poor, they employed their growing labour force and consequently grew faster than India is today. India, by contrast, risks squandering its population dividend,” Rajan said, adding that the joblessness contributes to another problem: “a growing gulf between the prosperity of the rich and the rest.
”Perhaps most concerning is the government’s attempt to kick-start manufacturing through a mix of subsidies and tariffs — a growth strategy modelled off of China — while neglecting other development paths that would play to India’s strengths.”
”The Modi administration has, in particular, underinvested in improving the capabilities of the country’s enormous population: the critical asset India needs to navigate its future,” he said.
The former Governor highlighted that India’s inadequate pace of growth was most clearly visible in the lack of good jobs. The working-age population’s share in India is increasing. But it is at risk of missing out on this population dividend because it cannot employ them adequately, he averred.
He believed that the growth of larger firms was the reason the country’s GDP continued to tick up but they generate far more profits than they do employment opportunities.
Rajan further noted that the rich Indians are doing exceptionally well. “In the last fiscal year, for instance, Mercedes-Benz recorded its highest-ever sales in India… but middle-class, lower-middle-class, and poor Indians are hurting.”