EXPLAINER
Former RBI chief Raghuram Rajan has said that India is “dangerously close” to Hindu rate of economic growth, which can further lead to an economic slowdown in the country.
Former Reserve Bank of India Governor Raghuram Rajan has issued an alarming statement regarding the growth of the Indian economy, saying that the country is “dangerously close” to the Hindu rate of growth, which can have a tough financial impact on the country.
Raghuram Rajan warned against the current economic growth rate of the country, saying that we will soon be near the Hindu rate of growth in view of subdued private sector investment, high-interest rates, and slowing global growth, as per PTI reports.
The former RBI chief noted that there has been a sequential slowdown in the economic growth per quarter, saying that this could further raise an alarm in the country. Rajan also revealed that the latest estimate of national income released by the National Statistical Office (NSO) last month was worrying.
What is Hindu rate of growth in Indian economy?
The Hindu rate of growth is a term used by economists to describe a slowdown in the economy of India due to several factors. The term ‘Hindu rate of growth’ refers to the lower annual growth rate of the economy of India before the economic reforms of 1991.
The Hindu rate of growth signifies a time in Indian economic history when the growth in India stagnated at around 3.5 percent from the 1950s to the 1980s, while per capita income growth averaged around 1.3 percent, leading to one of the lowest periods of economic growth.
Why Raghuram Rajan is concerned about Hindu rate of growth?
Former RBI governor Raghuram Rajan has issued a warning about an impending Hindu rate of growth issue persisting in India, which can further lead to an economic downfall in the country.
During an interview with PTI, Rajan said, “Of course, the optimists will point to the upward revisions in past GDP numbers, but I am worried about the sequential slowdown. With the private sector unwilling to invest, the RBI still hiking rates, and global growth likely to slow later in the year, I am not sure where we find additional growth momentum.”
The former RBI chief further added, “I am worried that earlier we would be lucky if we hit 5% growth. The latest October-December Indian GDP numbers (4.4% one year ago and 1% relative to the previous quarter) suggest slowing growth from the heady numbers in the first half of the year.”
(With PTI inputs)
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