Tolerant India

Raghuram Rajan has said that it is important for India’s economic growth that the country remains “tolerant.” Rajan is the former Governor of the Reserve Bank of India..

Raghuram Rajan has said that it is important for India’s economic growth that the country remains “tolerant.”

Rajan is the former Governor of the Reserve Bank of India.

Background

Raghuram Govind Rajan is an Indian economist who was the Governor of Reserve Bank of India (RBI) between September 2013 and September 2016. He is one of the few Governors who did not serve a second term in the office. At the time, rumors emerged of friction between Rajan and the Indian government but such reports remain unconfirmed.

Rajan is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. Prior to joining the RBI as its Governor, he was the Chief Economist and Director of Research at the International Monetary Fund from 2003 to 2006. He has also been the Vice Chairman of the Bank for International Settlements.

After having completed his tenure as the Governor of RBI, he has kept a relatively low profile from the media. However, in 2017, he has authored a new book titled, I do what I do. The non-fiction is a collection of speeches that Rajan delivered while he was the Governor of RBI.

Analysis

In order to promote his book, Rajan has given a series of interviews with the India media. During these interviews, he has touched upon various subjects from demonetization to inclusive growth and the role it will play in Indian economy.

Rajan has said that India’s legacy of being a tolerant nation was vital for its future growth. Rajan noted that tolerance was “extremely important for our economic growth, especially given the kind of service/ innovative economy we were likely to want to be, that it was to my mind a strength we had and that we should be very careful not to lose it.”

Rajan has also noted that the current state of the Indian economy should be something that should cause worry. In June 2017, it was revealed that India’s economic growth had slowed to 6.1% in the fourth quarter ending March 2017 as compared with 7.1% in the previous quarter. The growth rate has further slowed down during the April-June period to 5.7%. This is a three-year low. Experts have noted that this was largely due to demonetization that was introduced by the Indian government in 2016.

However, Rajan has advised a positive outlook regarding nevertheless. Speaking about whether the “good times” of the Indian economy are now in the past, he said that “they will come back.” He added, “But we should be worried. One of things in the last few years has been the population dividend. All these young people have come into the labor force… if they don't get jobs, they will be frustrated. It will be a very unhealthy climate then, which will impede economic growth.” 

He has also cautioned the nation against “lecturing” the world regarding economic growth noting, “There are so many other things that we can lecture the rest of the world -- cultural achievements, historical achievements etc, but on growth, let us lecture once we have achieved another 10 years of 8-10 per cent.”

Assessment

Our assessment is that Rajan is among many luminaries from India who have spoken about the importance of promoting tolerance in the nation. However, his comments regarding tolerance and India’s economic status, are likely to cause friction with the Indian government. 

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