India in midst of ‘growth recession’: Rajan

New Delhi, December 8

Reserve Bank of India’s former Governor Raghuram Rajan has said India is in the midst of a “growth recession” with signs of deep malaise in the economy that is being run through extreme centralisation of power in Prime Minister’s Office and powerless ministers.

Penning down his recommendations to help the ailing economy out of the ongoing slowdown in a magazine, he called for reforms to liberalise capital, land and labour markets and spur investment as well as growth.

He urged India to join free-trade agreements judiciously in order to boost competition and improve domestic efficiency. “To understand what has gone wrong, we need to start first with the centralised nature of the current government. Not just decision-making, but also ideas and plans emanate from a small set of personalities around the PM and in the PMO.” He said previous governments might have been untidy coalitions but these consistently took path of further economic liberalisation.

Rajan said the starting point to address the slowdown would be for the government to acknowledge the problem. “The starting point has to be to recognise the magnitude of the problem, to not brand every internal or external critic as politically motivated and to stop believing that the problem is temporary,” he said. — PTI

Something deeply wrong

Domestic businesses have not been investing and the stagnation in investment is the strongest sign that something is deeply wrong. — Raghuram Rajan, RBI Ex-governor