Raghuram Rajan At It Again! Bats For Liberal Democracy If India Has To Realize Its “Dream” Of A $5 Trillion Economy!

Raghuram Rajan
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The voluble ex-RBI (Reserve Bank of India) governor and now academic Raghuram Rajan believes that the “road to prosperity” runs through “strengthening liberal democracy”. Speaking at an event yesterday, Rajan had some words of “advice” both for the Modi Sarkar and the legions of “experts” who often laud the Chinese growth miracle as having been possible because China was authoritarian and hence, did away with the “niceties” of consensual and participative economic policymaking. Indeed, Rajan says this view is “outdated” as it is based on physical capital-led development and not on the free movement of people and ideas, both of which need an environment of harmony and societal peace.

In essence, what Raghuram Rajan means is that India has somehow “missed” the “bus” of economic growth for the last decade or so, preoccupied with internal divisions and social schisms, which threaten to tear the country apart. Of course, Rajan’s assessment would not find much favour in India, as the labels of the “world’s fastest-growing major economy” and soon to be a “$5 Trillion Economy” on everybody’s lips preclude the possibility that the nation faces an “existential crisis” where “factitious undercurrents” left unchecked, can lead to “anarchy” and worse, “genocide”, which can undo the promise and potential of India.

Rajan also had some advice for the present obsession with Atmanirhbar Bharat of self-reliant India, pointing out that this harks back to a past, where the Indian Economy used to grow below par rates, and he underlined that this is not the way to go, especially when “stagflationary” conditions prevail. He also spoke about strengthening the institutions, including protecting “free speech” and promoting “liberalism”. Again, Raghuram Rajan would invite much criticism on this count, as the overriding consensus is that India is doing well and is indeed becoming an economic superpower on its merit. However, there are enough indications that the “real India” is not “shining” as brightly as we would love to believe, and perhaps, we must take Raghuram Rajan’s words seriously.

Of course, Rajan also “lauded ” the RBI for stewarding the country in tough economic times, more so when India’s neighbourhood is in the throes of a deep economic malaise, where Srilanka is just “four meals away from anarchy” and even Bangladesh, showing signs of economic distress, with Pakistan already there, and possibly, Nepal joining their ranks. Giving credit where it is due, we must also note Modi’s foreign policy yielding “rich dividends” and India being wooed by both East and West. Moreover, there are enough indications that Modi Sarkar is implementing some policy suggestions about the “jobs crisis”. However, Rajan had some strong words on this count when he cautioned about the “labour participation rate” at less than 40% for men and an abysmal 20% for women.

On the other hand, Raghuram Rajan flagged the pandemic years as having taken their toll on the economy, and more so, on the poorer sections of society, with a majority of kids having lost out on formal education due to the “digital divide” and the overwhelming incidence of the Middle classes too being pushed into poverty. So, there we are, at the moment in India’s history, where the coming years would either “make or break” the nation, especially at a time of aspiration and ambition. Time will tell whether India “seized the moment” or “lost the plot” towards greatness, which would have consequences we would have to live with for the rest of our lives.


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