Rajan blames Modi , says Demonetisation, GST held back India’s economic growth

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Washington, Nov 10 : Former RBI Governor Raghuram Rajan openly criticized the two major decisions viz Demonetoisation and the Goods and Services Tax (GST) of Prime Minister Narendra Modi for obstructing India’s economic growth last year.

Concerning the NPAs,Rajan said that the  bankruptcy code cannot be the only way to clean up the banks, rather  a multi-prong approach is required to address the challenge of NPAs in India.

Rajan asserted that the current seven per cent growth rate is not enough to meet the country’s needs.

While addressing an audience at the University of California in Berkley on Friday, Rajan said from 2012 to 2016 India was growing at a faster pace before it was hit by two major headwinds.

“The two successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off interestingly at a time when growth in the global economy has been peaking up,” he said delivering the second Bhattacharya Lectureship on the Future of India.

Rajan said that the Indian economy is going through a rough time as seven is not enough for the kind of people coming into the labour market and we need to create one million jobs a month for the people joining the labour force.

“What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows…Because of these headwinds we have been held back,” he said.

 

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