Raghuram Rajan: DeMo was a bad idea

Raghuram Rajan, former RBI governor, has said that 'majoritarianism divides' and that the lack of jobs for youth in India is a very serious issue.

In an interview with NDTV's Prannoy Roy, Rajan opined on several topics and issues facing India. Here are some excerpts:

On Majoritarianism:

Rajan said that majoritarianism is affecting India as globalisation is seen as an "elite project" across the world, citing examples of the Yellow Vest protests<hyperlink> and rural workers who feel they have not benefited from economic growth owing to rising inequality. This, mixed with the loss of jobs and rising globalisation and immigration, has resulted in “a distrust in the elite”. With the spread of majoritarianism across America, Europe, Turkey and into India, people are looking for someone to blame, creating an "us vs. them" mentality, he said.

He said that the majoritarian nationalism wave relies on creating a group of "true nationals" and everyone who doesn't conform to their standards is seen as an outsider. This, he said, creates an air of "inclusion by exclusion".

He added that India's form of majoritarianism is Hindu majoritarianism and religious minorities are excluded from it, and the danger is that rather than uniting one set, it essentially divides the country into warring factions.

On lack of jobs:

Rajan said that the lack of jobs is a very serious issue when even at 7 percent growth, it is not producing the jobs that people are looking for, citing examples of 25 million people applying for 90,000 railway jobs. He also said that the lack of women in economic participation is a worrisome affair.

On the RBI v/s Government row:

Rajan said that there is pressure on the Central Bank to give more money to the government, saying: "When I was governor, we paid the highest dividend to the government. But that isn't the issue anymore. The government doesn't just want the profit, it wants the excess." Read more about the RBI v/s Government row here.

On Demonetisation and GST:
Rajan categorically reiterated that he was against demonetisation but agreed on the GST despite the expected early teething issues. He said: "I was asked about demonetisation, I said it was a bad idea. GST is a good idea in the longer term, but it had a short-term teething effect. India suffered because of GST and demonetisation. Just as the world economy was growing, the Indian economy growth slowed because of the implementation of both GST and demonetisation."

On the GDP Data revision:

Rajan said that data revisions take place all the time, but the changes made by the NDA government should be explained properly, with replicable data to verify the changes made. He said that it is necessary to do so in order to maintain the credibility of India's GDP statistics.