Former RBI governor Raghuram Rajan has come under fire for his remarks on India's growth and saying that there are significant structural problems that need to be fixed. India is making a big mistake believing the "hype" around its strong economic growth and that many years of hard work still remain to make it real, Mr Rajan said in an interview with Bloomberg.
The 61-year-old economist said that India needs to first improve its structural problems, including poor education and skills of the workforce, to meet its true potential. The new government sworn in after the 2024 general elections, as per Raghuram Rajan, must prioritise fixing these pending issues.
Mr Rajan said it is unlikely that India will not be a developed economy by 2047 adding that it would be "nonsense" to talk of that goal "if so many of your kids don't have a high school education and drop-out rates remain high."
His remarks have sparked a row with some economists calling his arguments "silly" and not related to the ground reality in India.
"Silly arguments by RR (Raghuram Rajan), school dropout rates are down,college enrolment increased,huge jobs created, Wrong comparison about chil subsidy given over many years,to annual spend on HE," said Mohandas Pai, Chairperson of Manipal Global Education.
NITI Ayog member and macroeconomist Arvind Virmani also said that Raghuram Rajan's comments seemed like those made by global experts who have never been to India.
"During the 1990s BOP crisis, we used to have a word for visiting WB, IMF and other MDB economists: “Parachute economists” . Sad that a former RBI Governor sounds like that to someone who has worked on Indian economy for 1/2 a century," Mr Virmani said in a post on X (formerly Twitter).
Mr Rajan, who is a professor of finance at the University of Chicago's Booth School of Business, had summarised that India needs to put more effort to achieve 8 per cent growth on a sustainable basis. He also criticised the government for its focus on high-profile projects like chip manufacturing instead of doing the work to fix the education system.
