Difficult year ahead for Indian economy: Rajan

Rajan said the income of the upper middle class increased because they could work from home during the Covid-19 pandemic, but those who worked in factories lost their earnings

New Delhi: Former governor of the Reserve Bank of India Raghuram Rajan, who joined Rahul Gandhi’s Bharat Jodo Yatra on Wednesday, said the next year will be difficult for the Indian economy as also for the rest of the world and the country failed to “generate reforms” needed for growth.

He said policies should be formulated keeping in mind the lower middle class which suffered the most due to the coronavirus pandemic. Rajan also pitched for creating a conducive environment for small and mediumscale industries and giving a push to a green revolution in the field of sustainable energy.

The Bharat Jodo Yatra, which started from Kanyakumari in Tamil Nadu on September 7, is passing through Rajasthan. The yatra will complete 100 days on Friday. Rajan walked with Gandhi as the Yatra resumed from the Bhadoti area of Sawai Madhopur on Wednesday and reached Badhshapura.

In a conversation with Rahul Gandhi, Rajan suggested that the next revolution in the country can be in the service sector. Gandhi, in his candid interaction that was posted on his social media handle, asked Rajan about his views on the current economic conditions in India, the US and other countries, challenges before small industries, and economic inequality, among others.

When the Congress leaders claimed that “only 4-5 industrialists are getting richer, the rest of the country is behind, a set of industrialists have a separate ‘Hindustan’ while the farmers and others have another ‘Hindustan”, Rajan said that this is a big problem but it is not about capitalists. He said that the income of the upper middle class increased because they could work from home during the COVID-19 pandemic but those who worked in factories lost their earnings.

“So this divide increased in the pandemic. Rich had no problem, the lower class got ration and other things but the lower middle class had a big damage. There were no jobs, unemployment increased,” he said.

He suggested that policymakers should consider this class. The BJP took a swipe at Rajan over his joining the Yatra in Rajasthan and said his commentary on India’s economy should be discarded with “disdain” as it is “coloured and opportunistic”.

The Congress hit back, saying the entire cabinet put together cannot match the abilities of the economist. Reacting to BJP’s criticism, senior Congress leader P Chidambaram tweeted, “Why is the BJP outraged by Rahul Gandhi having a conversation with Raghuram Rajan? Because PM Modi does not meet economists and economists have no access to PM Modi.”

In his conversation, Gandhi said that after independence, there was a green revolution, followed by the white revolution and then the computer revolution, so what can be the next revolution? Responding to this, Rajan said that the service sector revolution can be the next.

“We can work for the US from here without going to America… like doctors can provide telemedicine services to the US and can earn a lot of foreign exchanges. Our service export will make us a superpower in export,” he said. Secondly, he said, a new kind of green revolution is there.

“If we push on that, we can be at the forefront in building windmills, making our buildings green. Most damage from climate change will be in South Asia. You have already seen Bangladesh and Pakistan suffer. We occupy the same territory. So, we have to push very hard,” he said.