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

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.