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After PM Modi’s speech at Davos, Raghuram Rajan expresses his doubt about path of development


(G.N.S) Dt. 27

New Delhi

Just after Prime Minister Narendra Modi showcased a democratic and developing India to the global leaders at the annual meet of World Economic Forum at Davos in Switzerland, India’s former RBI governor Raghuram Rajan punctured Modi’s India pitch.

Modi said,”In India, ‘Democracy, Demography and Dynamism’ together are shaping the country’s destiny and leading it towards the path of Devepolment.” He also said, “Our Mantra is ‘Reform, Perform And Transform.”

However, Rajan did not agree. Speaking to a TV channel, he doubted if the way the Modi government was functioning was really democratic. He said only a small clique was making all the decisions while bureaucrats were sidelined.

Talking of stalled infrastructure projects, Rajan said there was the need for political focus on implementation. “I worry that we are not getting decisions taken by the bureaucracy. Mr Jaitley has talked time and again about removing the impediments. For example, the fear that bureaucrats have being accused of corruption but why are we doing that? So, that is one set of issues — decision making by the bureaucracy.”

Rajan went on to question what he thought was an undemocratic way of running the country. “But we also have to ask whether things are getting too centralised and if we are trying to run the economy by a very small set of people and whether there is enough sort of capacity to manage what a $2.5 trillion economy needs,” he said.

The spike in Indian markets is considered a sign of the economy doing well, but Rajan dismissed that as merely part of a global trend. When asked what was driving the rally in India stocks, he said, “Well, it is an across-the-globe phenomenon. Look at the Hong Kong market. We are not alone.”

“Across the world, markets have been ramping up and to that extent we are part of that same phenomenon. It is a phenomenon where a lot of money is chasing relatively sort of limited assets and some of the concerns have to do with the narrow sort of areas where this money is going. But longer term, the issue is whether we can get our fundamentals to be really strong. There are people who look to India for growth leadership over the next 10-15 years and we need to prove them right,” Rajan said.

On IMF’s view that India would be the fastest growing economy in the world, Rajan said, “What we need to do is, ask, why we need growth. And we really need need growth for the jobs that our young people need. Even with this level of growth, are we creating those jobs? If we are really to create those jobs we need massive investments and investment in job-creating activities like infrastructure, construction, etc”. He said big projects that could create jobs were not being implemented.

Rajan also warned the government that it needed to protect privacy of Aadhaar. “I do think that we have to assure the public that their data are safe. All these reports about easy availability of data are worrying and we have to ensure the security. We cannot just say trust us, trust us, it’s all secure and then have these reports coming out,” he said.

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