Former RBI governor Raghuram Rajan says India ‘dangerously close’ to Hindu rate of growth
By Lokmat English Desk | Published: March 8, 2023 03:26 PM2023-03-08T15:26:34+5:302023-03-08T15:26:34+5:30
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Former Reserve Bank of India (RBI) Governor Raghuram Rajan has said that India is “dangerously close” to the Hindu rate of growth as the country sees limited investment in private sector, high-interest rates, and decreasing global growth, news agency PTI reported.
The term "Hindu rate of growth" refers to the low Indian economic growth rates that averaged around 4 per cent from the 1950s through the 1980s. Raj Krishna, an Indian economist, coined the term in 1978 to describe slow growth.
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Rajan expressed worry over the slowdown in the quarterly growth, as revealed by the latest estimate of national income released by the National Statistical Office (NSO).
The Gross Domestic Product (GDP) in the third quarter (October-December) of the current fiscal slowed to 4.4 per cent from 6.3 per cent in the second quarter (July-September) and 13.2 per cent in the first quarter (April-June).
The growth in the third quarter of the previous financial year was 5.2 per cent.
“Of course, the optimists will point to the upward revisions in past GDP numbers, but I am worried about the sequential slowdown. With the private sector unwilling to invest, the RBI still hiking rates, and global growth likely to slow later in the year, I am not sure where we find additional growth momentum,” Rajan said in an email interview to PTI.
On Indian growth in fiscal 2023-24, Rajan said, “I am worried that earlier we would be lucky if we hit 5 per cent growth. The latest October-December Indian GDP numbers (4.4 per cent on year ago and 1 per cent relative to the previous quarter) suggest slowing growth from the heady numbers in the first half of the year.
“My fears were not misplaced. The RBI projects an even lower 4.2 per cent for the last quarter of this fiscal. At this point, the average annual growth of the October-December quarter relative to the similar pre-pandemic quarter 3 years ago is 3.7 per cent.
“This is dangerously close to our old Hindu rate of growth! We must do better.” The government, he said, was doing its bit on infrastructure investment but its manufacturing thrust is yet to pay dividends.
