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Ex RBI Governor Raghuram Rajan

Too many of our small businesses fail to grow big, ex-RBI governor Raghuram Rajan said. (File)

New Delhi:

Former Reserve Bank of India governor Raghuram Rajan has said he believes the country will be lucky if it achieves 5 percent growth next year.

The former governor also said next year will be more difficult than this year. “Of course this one had a lot of problems with the war and stuff. Growth in the world is going to slow down. People are raising interest rates which are curbing growth,” he said.

Speaking to Congress leader Rahul Gandhi, the former governor of the Reserve Bank of India said, “India will also be affected. India’s interest rates have also risen, but Indian exports have slowed quite a bit.”

“India’s inflation problem is more about commodities inflation, vegetable inflation problem. That will also be negative for growth,” he said in a candid conversation with Rahul Gandhi on Wednesday.

The economist said, “I think we’ll be lucky if we do 5 percent next year.”

The problem with the growth numbers is that you have to understand what you’re measuring against, he said. “Last year we had a terrible quarter. And you’re looking very good in that regard. So what you ideally do is look before the pandemic in 2019 and look now.”

He said: “If you look at 2022 versus 2019, it’s about 2 percent per year. That’s too low for us.”

When asked by Rahul Gandhi what he attributed this to, he said, “The pandemic was part of the problem, but we were slowing down before the pandemic. We had gone from 9 to 5. And we haven’t really generated reforms that will generate growth.”

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Rahul Gandhi had asked him, “One thing happens, 4-5 persons become rich and they can go into any business and rest of the people are left behind. Farmers, the poor have formed a new Bharat. These 4- The dreams of 5 people are fulfilled while the rest of them fall apart What should we do about this inequality?

“This is a big deal. This is not about industries,” the economist said, adding: “The upper middle class won because they were able to work during the pandemic, while the poor should go to factories and the factories closed during the pandemic pandemic,” he said. “This gap has widened during the pandemic,” he continued.

Economist Raghuram Rajan said, “The poorest could get rations. They get everything. These rich people had no problems. Those in between – the lower middle class – had to lose a lot. They lost their jobs. Unemployment rose. Debt mounted. We have to look at it. Because they suffered a lot.”

As for the concentration of wealth among the industrialists, he said we should look at them as well. He said, “We can’t be against capitalism. But we have to fight for competition. We can fight against monopolies. Monopolies are not good for the country.”

He said India’s problem was that our exports will also fall and growth will also decline. “Technical support is needed, credit loans, there must be certainty about the policy.”

He said change could be coming. “If banks know that small business sales are good and there’s a steady stream of income, they can make loans, but we need that information that’s collected and made available. That’s happening now. They’re starting to think about this in the fintech revolution, right? now. But in India it must be 10 times,” he added.

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Too many of our small businesses don’t grow big. They need a path to grow, he said.

“Here’s the problem, they get used to some of the benefits of staying small. If you don’t pay taxes, cops don’t come to them. They stay under the radar scan of the government instead of being helped by the government.”

He said, “You (company) will stay under the radar until you get an income stream. Once your business grows, it should be like I’m going to look at you, I’m going to help you. I’m not going to tax you whether you make life miserable. We need that situation.”

He added that once these companies get better, the government will take those benefits away. “There’s no incentive to get bigger. Why don’t you say, if you get bigger, you get these five-year incentives? By the time they’re big, they don’t care,” the economist added.

(Except for the headline, this story has not been edited by NDTV staff and is being published from a syndicated feed.)

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