Former RBI governor Raghuram Rajan said there was a possibility that the Indian economy might slow down if a coalition government came to power after the 2019 Lok Sabha election. In an exclusive interview to India Today at the World Economic Forum in Davos, Rajan spoke on several issues that affected the Indian economy. Rajan said India had serious problems such as serious agricultural distress and jobs creation. "We have had a reasonable growth rate in the past five years. More jobs need to be created," Rajan said. Rajan also said the pace of industrial growth was not creating jobs.
On GST and demonetisation
Even though Rajan welcomed Modi government's policies such as GST and Insolvency and Bankruptcy Code, he was critical of the government's decision to scrap Rs 1,000 and Rs 500 currency. He said demonetisation was a "setback" to the economy.
On RBI's independence
Rajan also spoke about the ties between the Reserve Bank of India and the central government. Rajan said the resignation of former RBI Governor Urjit Patel was a matter of "concern" and emphasised on the need for the central bank to remain autonomous. "RBI's operational autonomy needs to be protected," he said. Rajan, however, said he had a "fulfilling" experience as RBI governor and declined that the RBI has offered him any fresh contract.
On challenges before Indian economy
The former RBI governor said the country needs to create conducive environment for industries. "We need to create appropriate framework for development and re-energise private investment," Rajan said. "The best minister in the government should be given the responsibility of the human resource development ministry," he added.
"We need to improve the quality of our schooling. We are building generations who will not be able to compete. Education will create some of human capital that would populate services," Rajan said suggesting a solution to the problem of job creation in Indian economy.
"Infrastructure roll-out and land acquisition are major issues which the Indian economy is facing. Education and labour laws also need reforms," Rajan said. Rajan also emphasised on creating healthy environment and framework for infrastructure in order to create jobs.
On NPAs and banking reforms
The former RBI governor also spoke about mounting non-performing assets (NPA) of various public sector banks. He said the problem of NPAs was hanging over the banking system. "We need to clean up NPAs and recapitalise them. Lending to bad business to keep them alive in the past was an issue."
Rajan said governance reforms were needed and that the banking reforms in the country were "hijacked" by the bureaucracy. "Public sector banks need to be less politicised," Rajan said.
On possibly joining politics
Rajan said he was not a politician but speaks to politicians from all sides. Rajan dismissed the possibility of being India's finance minister if the Congress was voted to power in 2019. "I am not a politician. These are just speculations," he said.
Edited by Aseem Thapliyal