Growth rate of 7.5% not enough to create jobs for the Indian workforce, Raghuram Rajan tells CNBC
India should concentrate on achieving 10% growth in the next two decades, the former RBI governor said in an interview.
India should concentrate on achieving 10% growth in the next two decades by building infrastructure, making it easier for companies to do business and improving the quality of healthcare and education, former Reserve Bank of India Governor Raghuram Rajan told CNBC in an interview aired on Tuesday.
Rajan, who is now a professor of finance at the University of Chicago’s Booth School of Business, said a 7.5% growth rate was not enough to employ the 1.2 crore people joining India’s workforce every year.
“Well, things are happening,” Rajan replied when asked about the lack of economic reforms. “They are happening more slowly than one would wish. That’s potentially the cost of getting political agreement. But we do need to work at it and work faster at it because we have a young population and the world is changing. The world is less receptive, as we just talked, to exports.”
Rajan said India also needs to think about how it was going to achieve higher growth. “So if India becomes a manufacturing giant overnight, who’s going to buy its stuff?” the economist asked. “So we need to think about our pathway of growth. It will be different from China’s, but it can be a very healthy growth pathway if we do what is necessary.”
The former RBI governor said the push for reforms would be put on hold till the General Elections in 2019. “But post-election, if we can accelerate this pace of reform, there is no reason why in two or three years we cannot move up to a higher plane of growth,” he said.