At the OP Jindal lecture at Brown University in the United States, Former Reserve Bank of India Governor Raghuram Rajan said, “India has slowed considerably from the go-go years before the financial crisis, but even from the 9% growth in the first quarter of 2016″. He added,“India is losing its economic way, in part because it is centralising power without a persuasive economic vision. We risk wasting the demographic dividend”.
The country’s economic growth reduced to a six-year low of 5% in the quarter that ended in June, after which the RBI lowered the 2019-’20 growth to 6.1%. Rajan said the fiscal deficit was high, which affected the growth of the economy, adding that the actual fiscal deficit may be higher than the collective figure of the Centre and states at 7%. The actual collective fiscal deficit may be higher around 9% to 10%, according to international investment firms, Rajan said.
Rajan said, “factors such as ill-conceived demonetisation and poorly executed GST” were the tipping point for the current slowdown. “Even while growth is slowing, the government is pushing its welfare programme, which gives it a lot of political capital among people. There is tremendous pressure on the government for a stimulus. But you cannot keep spending, something has got to give,”.
Highlighting that the ruling party identified majoritarian issues like triple talaq and Kashmir, Rajan said: “I don’t believe that the majoritarians improve national security. They weaken it, they want national integration on their terms. Majoritarian nationalism is intrinsically divisive because it labels a bunch of citizens the ‘others’ and sets impossible terms for these minorities to be considered true citizens. It ends up alienating them and, as Lincoln said, a house divided by itself cannot stand.” He added, that while majoritarinsim may win elections, it is taking India down a “dark and uncertain path”. “India is better off strengthening its democracy and decentralising”.