Former RBI governor Raghuram Rajan doubts 7 per cent economic growth

New Delhi: Former RBI governor Raghuram Rajan on Tuesday expressed doubts over Indian economy growing at 7 per cent when not enough jobs were being created and said the current cloud over the GDP numbers must be cleared by appointing an impartial body to look at the data.

Mr Rajan, who has also served as chief economist at the International Monetary Fund (IMF), said he had no idea what statistics are pointing at currently and “a revamp” was needed “to really figure out what India’s true growth rate is”. “I know one minister (in the Narendra Modi government) has said (that) how can we be growing at 7 per cent and not have jobs. Well, one possibility is that we are not growing at 7 per cent,” he told a TV channel.

He did not name the minister. Finance minister Arun Jaitley has been stoutly defending the growth data saying an economy cannot be growing at 7-8 per cent without creating jobs. He has also stated that no major social agitation indicates it hasn’t been jobless growth.

Mr Rajan, who was Reserve Bank of India (RBI) governor between September 2013 and September 2016, said a stronger broad-based growth is needed that creates more jobs.

On doubts being raised by some over economic data after revision in growth rate, he said a clean up act is needed and an impartial body appointed to look at the numbers. “I just think that we need now to essentially clean up, find out what in fact is the source of confusion with the new GDP numbers, with the revisions etc. I would say setting up an impartial body to look at it is an important step to resorting confidence,” he said.

‘Growth for many means good jobs’

The impartial body may throwback the same numbers but “we absolutely need better confidence in our GDP numbers now given the back and forth we have had”.

In November 2018, the Central Statistics Office (CSO) lowered the GDP growth for previous UPA period by recalibrating national accounts. After this, the four years of the current government showed higher average growth than that achieved during the UPA.

Last month, the government revised the economic growth rate upwards to 7.2 per cent for 2017-18 from 6.7 per cent estimated earlier.

Dr Rajan said a broad-based growth that creates meaningful jobs for people was needed. “We need stronger broad-based growth, which primarily for most people means good jobs. What we need to do is focus on how do we create good jobs for the vast number of people who are leaving schools, who are leaving agriculture, who are leaving universities,” he said.

“Lot of people have said the population dividend should not become a population curse. This is the time when we need to ma-ke sure that in fact doesn’t happen,” he added.

He suggested that the government should introspect on some of its decisions like the controversial note ban.

On the question of lack of jobs, indicated by the data of the NSSO recently, he said there was a need for credible data. “Given that kind of anxiety, it is important, just to convey to the world, that we are not manipulating anything…,” he said.

He said India has had a good record with credible data. “We need to take a fairly clean, independent look at our statistics process. What I would think might be useful is to get a panel of independent experts to go through that,” he said.