‘Reforms on the shelf till next elections’: Raghuram Rajan

Former Reserve Bank of India (RBI) Governor Raghuram Rajan believes that reforms in India will be put on the shelf till the next elections.

In an interview with television channel CNBC, Rajan said if reforms are accelerated post-elections, “there is no reason why in two or three years we couldn't move up to a higher plane of growth.”

Key reforms are needed in areas like land acquisition and the power sector, he said. “Once those are done the impetus will be given, industry and business will get more confident and that could be the new era.”

Rajan, now the professor of finance at the University of Chicago’s Booth School of Business, was in Hong Kong for the Credit Suisse Asian Investment Conference.

“There are some headwinds in India still, though we had a lot more earlier in the year - from the move to a new goods and services tax, from the effects of demonetisation and to some extent a continuing headwind from the cleaning up of the banking system,” he told the network. “Now I think some of this is being resolved. There's still some way to go but we should be thinking in India of the next 10 to 20 years and there it needs a massive push to create jobs which means building out infrastructure, clearing the way for companies, easing the way for them to do business, and improving the quality of our human capital which includes healthcare and education.”

The much-respected former RBI chief was confident that if the government undertakes steps that “require spending political capital,” then India could move up from the 7.5 percent growth rate, which is not enough to employ the 12 million people coming to the labor force every year in good jobs.” Growth could be raised to 10 per cent, he felt.