Indians' belief in country's economic future has diminished: Raghuram Rajan

Indians' belief in the country's economic future has diminished in the recent years, with the COVID-19 pandemic taking a further toll on sentiment while pushing many middle-class citizens into poverty, former RBI governor Raghuram Rajan has said.

Virtually addressing an event organised by the NALSAR University of Law, Rajan further said the domestic stock market is booming but that does not reflect the reality that many Indians are in deep distress.

"In recent years we have gotten a little less confident.

"Our belief in economic future has diminished...the pandemic toll has further diminished our self-belief or 'atma vishwas' even further while pushing many in the middle-class into poverty," he said.

The Reserve Bank of India (RBI) has lowered the growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier, while the IMF has projected a growth of 9.5 per cent in 2021 and 8.5 per cent in the next year.

Rajan further said the thrust of the economic programmes should be to create good jobs, while lamenting that states are increasingly reserving employment for locals, undermining the idea of India.

"As our economic performance is diminishing, our democratic credentials, our willingness to debate, to respect and tolerate differences is also taking a hit, not just at the Centre but in many states.

"You know community sentiment is very easily hurt," he said.

He also stressed on the need for India joining international trade agreements.

Rajan, currently a professor at the University of Chicago Booth School of Business, noted that any attempt to keep a large part of a country's population down is morally wrong.

"Growth that does not take everybody along, is unsustainable," the eminent economist observed.

Rajan also emphasised that there is a need to protect fundamental rights under all circumstances, saying ,"When we suppress debate and criticism, it leads to poor one-size-fits-all uninformed policy choices, with little course correction."

Photograph: Adnan Abidi/Reuters