Former governor of Reserve Bank of India Raghuram Rajan. Photo: AFP
Raghuram Rajan, the former governor of the Reserve Bank of India. Photo: AFP

Former Reserve Bank of India Governor Raghuram Rajan has said the government must tackle the controversy over the country’s gross domestic product (GDP) by appointing an impartial body to review the data.

Rajan also expressed doubts over the Indian economy growing at 7% per annum, claiming that not enough jobs are being created.

In a television interview Rajan commented on how an un-named minister had claimed GDP growth of 7%; Rajan wanted to know how that was possible when there were no new jobs being created. He went on to remark that perhaps India was not growing at 7%.

Finance Minister Arun Jaitley reportedly made the observation about GDP growth. He had also stated that the fact there had been no major social agitation indicated that the growth had not been jobless.

In November 2018, the Central Statistics Office (CSO) lowered the GDP growth for the period of the previous Congress-led UPA government by recalibrating national accounts. Following the revision, the four years under the current government showed higher average growth than during the period when the UPA government was in control.

Last month, the Modi government revised the economic growth rate to 7.2% for 2017-18, up from the earlier estimate of 6.7%.

Questions have been raised about the government not making public the National Sample Survey Office (NSSO) labor survey that reportedly put the national unemployment rate in 2017 at a 45-year high.

Rajan also observed that the government should give some more thought to the controversial ban on high value currency notes in November, and assess the positives and negatives of demonetization.

Agricultural distress

The former central bank governor conceded that the country was facing widespread agricultural distress, but stated that he was not in favor of farm loan waivers.

He feels that loan waivers kill the credit culture and benefit only those farmers who have taken loans through a formal system and not the poorer farmers who have borrowed from money lenders. Instead, he said the country should focus on resolution of causes of farm distress.

Rajan was the 23rd Governor of the Reserve Bank of India from 2013-2016, and was also the Chief Economist at the International Monetary Fund.

He is currently a professor at the University of Chicago Booth School of Business and is in the country to promote his book “The Third Pillar – How markets and the state leave the community behind”.

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