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Raghuram Rajan: Modi govt more focussed on politics than economic slowdown

Rajan has said that India has not been able to reverse its economic slowdown because the govt is more focussed on its political and social agenda
New Delhi: Former RBI Governor Raghuram Rajan has said that India has not been able to reverse its economic slowdown because the Narendra Modi government is more focussed on meeting its political and social agenda, rather than paying attention to the economy. India can still reverse its slowing economic growth by paying attention to key issues, he said. While responding to a question on what’s stopping India’s growth which continues to be below potential, Rajan said, “It’s a sad story, I think most recently, it is politics.”

‘Govt paying more attention to politics than economic slowdown’

In an interview to Bloomberg TV, Rajan said that after a massive election win, the current government had “focussed more on fulfilling its political and social agenda rather than paying attention to the economic growth.” “Unfortunately, this drift has continued a pace of slowing growth, which was precipitated initially by some actions the government took such as the demonetisation and a poorly rolled out Goods and Services Tax (GST) reform,” Rajan said. “These are things that they can change if attention is paid to them and appropriate actions are taken,” the former RBI Governor said. He also added that India has not paid sufficient attention to cleaning up the financial sector, which has added to the economic slowdown.

On the impact of Coronavirus on India

On being asked about the spread of Coronavirus globally and its impact, he said there will certainly be some legacy issues in terms of business rethinking in the global supply chain. “If it is disrupted anywhere, the entire supply chain is held ransom and companies are going to start rethinking that should we actually have these really spread out global supply chain or to bring them back closer home and how much diversification should we have. Should we have multiple production sites across the world rather than have it focussed primarily in Asia,” he said.

The backdrop

Rajan’s comments came just ahead of India’s GDP hitting a nearly 7-year low of 4.7 percent in the December quarter of FY2019-20. The interview given to Bloomberg TV was aired just before the official numbers were released.