India making big mistake believing hype about growth: Ex-RBI Guv Raghuram Rajan

NT Correspondent

New Delhi: Former central bank Governor Raghuram Rajan cautioned against India's reliance on the 'hype' surrounding its robust economic growth, stressing the need to address significant structural issues to unlock the country's full potential, as reported by Bloomberg.

In an interview, Rajan highlighted the paramount importance for a new government post-election to address the deficiencies in the education and skills of the workforce.

He emphasized that without rectifying this fundamental aspect, India would struggle to harness the potential dividends of its youthful population, with over half of its 1.4 billion citizens under the age of 30.

Rajan cautioned against embracing the hype, stating, "The greatest mistake India can make is to believe the hype."

He underscored the necessity for continued diligence, expressing concern that prematurely assuming arrival at a developed status could be detrimental.

He criticized Prime Minister Narendra Modi's ambition to achieve developed nation status by 2047, labeling it as "nonsense" given the prevailing educational challenges.

Highlighting the urgency of the situation, Rajan pointed out that India must enhance workforce employability and generate quality employment opportunities.

He cited alarming statistics regarding the decline in learning levels among Indian schoolchildren and emphasized the need for urgent action to bolster human capital.

Regarding India's economic trajectory, Rajan tempered recent optimism, asserting that sustained 8% growth necessitates substantial efforts.

Despite the government's projection of over 7% growth in the upcoming fiscal year, Rajan cautioned against complacency.

He criticized policy priorities, particularly the government's emphasis on subsidizing chip manufacturing over higher education.

He highlighted the disparity between subsidies allocated to semiconductor firms and those for education, expressing concern over misplaced priorities and urging a reevaluation of resource allocation.

Expressing apprehension over the government's focus on high-profile projects at the expense of foundational reforms, Rajan stressed the importance of nurturing the educational ecosystem to support emerging industries like chip manufacturing.

 He warned against neglecting critical underpinnings essential for sustainable growth.