Raghuram Rajan said, "If we can do the right things, we can certainly restore what we have lost".
Raghuram Rajan, the former chief of the Reserve Bank of India, today said India is less of a liberal democracy now than it was 10 years ago. Tracing the economic troubles of neighbouring Sri Lanka in an exclusive interview with NDTV, Mr Rajan said part of the island nation's problems lie in the troubled history of minorities and their place in what once was "quite a successful middle-income economy".
"Sri Lanka certainly had a large minority – the Tamils. And when they had a problem of jobless growth, politicians found it particularly easy to deflect some of the attention to the problem of minorities and made a bogeyman out of the minorities... essentially creating the strife that resulted in civil war," he said.
"I would say that to my mind is the lesson from Sri Lanka. Let us work for communal harmony and unity of the country. That will be strong for the economy and integrity of the country," he said.
Talking of the parallel in India, he said While India is "some distance away from that, it is something we should start worrying about given the kind of fuel that is being fed to this fire by some politicians".
Asked how communal strife can affect economic climate, Mr Rajan said, "People worry. First, they think of the consequences down the line... The other thing they think about is 'Do I really want to do business with a country which mistreats its minorities?'"
Citing the example of China, Mr Rajan said the Asian giant had a lot of "pushback" from the US and Europe on the question of Uyghurs. "There are sanctions on goods that are produced there. There are also increasing motions by shareholders saying they want to stop doing business in these areas," he said.
In this sphere, civil society also has a key role to play and it is important to have an image of a tolerant, respectful democracy, he said.
"I would say that if we can do the right things, we can certainly restore what we have lost but the further you go down this road, the harder it becomes," he added.