Deep Malaise in Indian Economy, Says Former RBI Governor Raghuram Rajan

© REUTERS / Himanshu SharmaA man displays 500 Indian rupee notes during a rally organised by India’s main opposition Congress party against the government's decision to withdraw 500 and 1000 Indian rupee banknotes from circulation, in Ajmer, India, November 24, 2016.
A man displays 500 Indian rupee notes during a rally organised by India’s main opposition Congress party against the government's decision to withdraw 500 and 1000 Indian rupee banknotes from circulation, in Ajmer, India, November 24, 2016. - Sputnik International
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New Delhi (Sputnik): Rising inflation, falling gross domestic product (GDP) growth, and dwindling investments have taken a toll on the Indian economy, forcing India’s central bank to lower the growth forecast for the current financial year to 5% from the previous estimate of 6.1%.

Top economist and former RBI Governor Raghuram Rajan said on Friday that the Indian economy is showing signs of “deep malaise.”

In an article, published in India Today, the country’s former top banker enlisted priorities for the government to come out of the economic slowdown. He suggests that energising weak non-banking financial companies, agricultural and labour contract reforms should be the key government priorities.

“There are signs of deep malaise in the economy. Growth is slowing significantly…Repeated government allusions to a $5 trillion economy by 2024, which would necessitate steady real growth of at least 8-9 percent per year starting now, seem increasingly unrealistic.”

In his prescription to the Prime Minister Narendra Modi led government, the former chief economist of the International Monetary Fund (IMF), advised the government to retain sufficient competitors in the telecom sector, initiate agricultural reforms with easier access to inputs like seeds, as well as technology and power. Rajan also called for liberalising laws on land acquisition.

The other areas that Rajan has said require government’s attention are real estate, construction, non- banking financial services and infrastructure.

The government reported lower GDP growth of 4.5% in the July-September quarter last week. Opposition parties are increasingly agitated by rising food price inflation. Onion prices have increased sharply to about $3 a kg, which is almost ten times the normal price.

Invoking God to save the Indian economy, former finance minister P Chidambaram said earlier this week, “GDP numbers are irrelevant, personal tax will be cut, import duties will be increased. These are BJP’s ideas of reforms. God save India’s economy.”

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