Here's how Raghuram Rajan slammed India's two largest political parties

• At the launch of the book in New Delhi, Rajan singled out India’s economic growth data, explaining that 7% plus growth in GDP did not seem plausible in a country where jobs weren’t being created.
  
• The former RBI governor said that an independent body should be set up to assess and if need be, revise GDP growth estimates.
  
• Rajan also questioned the viability of Congress’s recently-announced basic income support scheme, NYAY.

As Raghuram Rajan hit the promotional circuit for his new book, “The Third Pillar”, he was expected to express his thoughts on the election pledges of India’s two biggest political parties.

The former Reserve Bank of India governor, who was known for speaking his mind during his tenure from 2013 to 2016, did not disappoint.

At the launch of the book in New Delhi, Rajan singled out India’s economic growth data, explaining that 7% plus growth in GDP did not seem plausible in a country where jobs weren’t being created. In an interview with CNBC TV18, Rajan remarked, “Well, one possibility is that we are not growing at 7%”.

The Narendra Modi administration has been accused by its rivals of inflating growth data during its tenure and suppressing the most recent employment survey that reportedly showed unemployment at a 45-year high.

“I just think that we need now to essentially clean up, find out what in fact is the source of confusion with the new numbers,” the Times of India quoted him as saying. He further added that an independent regulator should be set up to assess and revise the data if need be.


Not surprisingly, it was suggested that his criticism was politically motivated.

RR isn't talking like an economist but a politician. NDA eco performance impacted by two major disruptions, one self inflicted, but GST and IBC will deliver over medium term. Cant think of one single reform in UPA era. Growth in first term had nothing to do with what they did.

— R Jagannathan (@TheJaggi) March 26, 2019

Rajan has often been criticised for siding with the Indian National Congress. He had served as the chief economic advisor to the previous government led by the Congress. However, that is only half the truth.

The fact is Rajan has also questioned the viability of Congress’s recently-announced basic income support scheme, NYAY. The party has promised an annual payment of ₹72,000 to the poorest 20% of the country’s population.

"Is it going to be an add-on or substitute a bunch of things? How do we get to the poor?" the Economic Times quoted Rajan as asking. He also said that the government should roll back existing subsidy schemes to fund the programme.

Interestingly, Rajan was said to be one of the economists that the Congress consulted when devising the scheme.

Finally, Rajan took aim at the BJP and Congress’s habit of offering loan waivers as opposed to resolving the actual reasons for farmers distress such as supply chain inefficiencies.

In line with previous statements, he explained that not only are waivers an impediment to “credit culture” but they only cover farmers with access to formal banking channels, leaving out poorer farmers who have taken credit from moneylenders.


SEE ALSO:

With a new governor in place, India’s government looks likely to get a payout from the central bank before the end of financial year

India’s BJP-led government has released a set of revised GDP data that dramatically reduces growth during the previous administration’s tenure

Davos Digest: Raghuram Rajan lifts India's spirit and other stories from the World Economic Forum