India's economy in a 'worrisome' situation: Raghuram

India's economy in a 'worrisome' situation: Raghuram

India’s former Reserve Bank of India (RBI) Governor Raghuram Rajan, gestures during an interview with Reuters in New Delhi, India. (Reuters Photo)

Hinting at the economic slowdown, former Reserve Bank of India chief Raghuram Rajan warned that India's fiscal deficit was pushing Asia's third-largest economy to the brink of a 'worrisome' situation, according to a report in the Economic Times

"India has slowed considerably from the go-go years before the financial crisis, but even from the 9 per cent growth in the first quarter of 2016," Rajan pointed out, while delivering a lecture at Brown University.

Recently, the World Bank slashed India's growth projection rate to 6 per cent from 6.9 per cent.

Moreover, the Index of Industrial Production on economic growth clocked its lowest figures in seven years.

"India's financial stress should be seen as a symptom, rather than a sole cause," said Rajan. He said that the government of India had not been able to figure out "new sources of growth". Rajan is a critic of demonetisation and the GST.

“The sequence of demonetisation and GST was essentially the straw that seems to have broken the Indian economy’s back because it came at a point when the Indian economy was already relatively weak," he said.

Rajan added that without criticism, the government would live in a pleasant 'make-believe' environment.