Former RBI Governor Raghuram Rajan Says India’s Growth Rate Much Lower Than 8.5%

Former Reserve Bank of India (RBI) Governor Raghuram Rajan says if one takes away the 'fluff' from India's growth numbers, its real rate of growth could be around 6-6.5% and not 8-8.5%. Speaking at an event at Northwestern University's Kellogg Business School, Rajan suggested there were two faces to the Indian economy, “One is a face we all see which we talk about in conferences about China plus one, Apple creating factories in India. The other face is a hurting middle and lower middle class, which is desperate for work.” Rajan also said that PM Narendra Modi’s dream of having a developed India by 2047 was not easy and would need growth rates of 9-10% over a sustained period of time. The economist is also not convinced of India’s growth numbers. According to Rajan, “Let's say we're growing at 6 to 7%, the big question is why aren't we seeing inflation at this rate of growth? What creates this kind of inflation is when you are growing fast and you run out of supply. Typically your labour, wage rates start going up but in India they are not. For a fast growing country, for agricultural employment, growth is a travesty. Why do people find jobs in agriculture? That's low productivity. They should be finding jobs elsewhere."