'We would be lucky to achieve 5% growth rate next year:' Raghuram Rajan tells Rahul Gandhi

Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday told Congress leader Rahul Gandhi that the next year will be difficult for the Indian economy as also for the rest of the world. In a conversation with the Congress party leader, Rajan added that the country would be lucky to achieve a 5 per cent growth rate next year as key interest rates have gone up and exports have slowed down.

"The problem with the growth numbers is that you have to understand what you are measuring with respect to. If you had a terrible quarter last year and you are measuring with respect to that, you look very good," Rajan said.

He added, "So ideally what you do is look before the pandemic. And if you look at 2022 vis-a-vis 2019, it's about 2 per cent a year. That's too low for us."

Furthermore, Rajan highlighted that while the pandemic was part of the problem, India was slowing even before the pandemic. "We haven't generated reforms needed for growth," he stated.

The conversation between Raghuram Rajan and Rahul Gandhi was held hours after Rajan joined him in the Bharat Jodo Yatra on Wednesday. The same was posted by Gandhi on his Twitter handle.

On Gandhi's question regarding concentration of wealth in the hands of a few industrialists, Rajan said,
“We cannot be against capitalism but we have to fight for competition. We should be against (creation of) monopoly.”

He also added that the lower middle class suffered the most during the pandemic due to unemployment and rising interest rates. Policies should be formulated keeping in mind the lower middle class which suffered the most due to the coronavirus pandemic, Rajan said.

Talking about why small firms don't grow too big in the country, he said that they get used to some of the benefits of staying small. "As soon as they grow bigger, we take away those benefits. Why don't we instead say, if you grow bigger, you'll have these benefits for five years," Rajan explained.

Recently, The World Bank predicted the Indian economy to grow at 6.9 per cent in the current fiscal year. The World Bank raised its forecast for India's growth to 6.9% for the current fiscal year from 6.5% earlier. It also trimmed its expectation for the next fiscal year to 6.6% from 7% earlier.

Also Read: Former RBI chief Raghuram Rajan joins Rahul Gandhi at Bharat Jodo Yatra