There Are Two Indias, The Fast Growing India Must Lift The Underdeveloped India Up The Growth Path: Raghuram Rajan

Jaipur: No one can and no one in the world does belittle the economic growth and development India has seen over the last three decades, that of consistent and persistent growth hovering around 6 percent that not many nations have done, but it is for sure not the resting ground, nor does it give the country bragging rights as there is still so much that needs to be accomplished. So feels economist and former RBI governor Raghuram Rajan, who says a steady 12 percent growth over the next 30 years is what it would take for the country to nestle among the comity of developed nations.

He also says there are “two distinctively different Indias", two contrasting entities that live next door to each other.

“Nothing has gone wrong with the economy and no one in his right mind would belittle India’s achievement of consistently steady growth of 6 percent that not many countries can boast of. But yes, India could have done better, most definitely,” he tells ABP Live during an exclusive interaction on the sidelines of the Jaipur Literature Festival in the Pink City.

India is currently faced with the challenge of bringing about harmony and synergy in the two Indias — one that is growing faster than China, and the other lagging far behind, where people cannot live if the government does not provide free food grains, says Rajan, referring to a staggering 80 crore population to which the government has guaranteed free grains for a long time to come. According to him, the initiative in itself is laudable and lofty, but questions arise as to whether “we as a nation are doing enough, in terms of scale and direction on the policy and interventions front”.

On this front, Rajan says, the government ought to help the other India lift itself up through well-meaning initiatives. There is of course a need to create the right environment with appropriate policy initiatives, he says.

Offering an alternative approach to development and growth, the former RBI governor is against freebies of any sort. He says the government must concentrate on job creation for everyone — and not just any jobs, but good jobs. “Har ghar mein ek achhi naukri hum kaise kar sakte hain (how we can ensure a good job for every family)” should be the question the government must be asking itself, Rajan says, adding that political parties of all hues have to explain why they could not pay the requisite attention to this key development parameter.

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Need To Create 'Hundreds Of Thousands Of Jobs'

Raghuram Rajan has co-authored a book, ‘Breaking the Mould: Reimagining the Economic Future’, with Rohit Lamba, assistant professor, Pennsylvania University, and visiting assistant professor of economics at New York University’s Abu Dhabi campus, which he says comes out with a blueprint for the alternative approach to economic growth mentioned above. 

The plan, Rajan believes, could make the two Indias come closer and lead to an overall growth that is higher as well as more inclusive. However, he adds, this would require greater decentralisation – from the Centre to the states, and from the states to the districts.

“Building huge buildings is not enough, though this also generates jobs. What instead is needed is creation of hundreds of thousands of jobs. There must be stress on building capabilities of the people, skilling, reskilling and upskilling them for better jobs. In short, improving the capability of individuals to contribute more to the GDP in their individual capacities,” Rajan says.

About his new book, he says it is on economics but not for economists, as it explains the complexities of the different concepts in simpler terms. 

"We have tried to offer an alternative approach to solving our economic problems. One of the solutions is to create the requisite number of jobs, quality jobs, for the people we already have, ​and how we upskill people for the jobs that the service providers and manufacturers bring. You have to bring new jobs and also upskill. We have tried to tell the how-to aspect in the book," the former RBI governor says, adding: “If we don’t, then there is a danger that the potential demographic dividend of the country can turn ​into a demographic disaster.”

Citing the example of Manipur, which has seen reeling under violence for many months now, Rajan says the youth there are unemployed, adding that it would cause enormous social harm if the number of jobs are insufficient.

But is it possible for the government to create so many jobs?

Rajan says the government may not create so many jobs but "we must create more possibilities in the private sector". But before going there, he says, there is a strong need to improve the quality of education, healthcare, and upgrading of skills of the people, and that “much will happen if primary education is improved, but it must be done in a mission mode".

Asked what he thinks are the problems India is afflicted with, Rajan says India has not done well enough in the manufacturing sector even after liberalisation of the 1990s. But he also says though India’s weakness in industrialisation and its relative inability to compete with Asian neighbours is an issue, it is doing excellently well in the world in some other sectors like consultancy and IT services.

"There are some concrete ideas on job creation and we have explored the functioning of highly successful Made in India global companies in the services sector and a number of exciting companies working in the technology areas that indicate the country’s prowess," says the economist. But, he adds, what the country clearly does not want is the kind of a debate on north-south divide on economic development and growth, with concerns being expressed in the south over an apparent imbalance in the allocation of central funds not commensurate with the tax contributions from the southern states. Now these concerns, coming ahead of the delimitation process, could become very tricky and need sensitive handling, and the country can do without divisiveness on this issue, Rajan cautions.

Asked if people like him should enter politics so they can articulate such issues with greater clarity and effectiveness, ​and the former RBI governor rules it out. “I am not made for politics and (it is) definitely not my cup of tea. Sure, there were some rumours that floated, and yes I can confirm they are mere rumours.”

The author is a senior journalist and freelance contributor.

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