Unfazed by criticism from Union ministers, RBI governor warns against euphoria about high economic growth

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Reserve Bank India Governor, Raghuram Rajan on Wednesday warned against the euphoria about India being the world’s fastest-growing economy.

According to PTI, he said that India remained one of the poorest nations and has “a long way to go”, as he sought to contextualise his controversial ‘one-eyed is king’ analogy.

He said, “We are still one of the poorest large countries in the world on a per capita basis and have a long way to go before we reasonably address the concerns of each one of our citizens.”

“The average Chinese citizen is over four times richer than average Indian,” the outspoken RBI Governor said while referring to the frequent comparison between the two nations.

Rajan said that the Chinese economy was smaller than India’s in the 1960s but was now five times bigger adding that “among the BRICS (group) we have the lowest per capita GDP.”

Rajan also sought to contexualise his comments during his recent visit to USA, where had said that India being proclaimed as the ‘bright spot in a gloomier world economy’ was like “a one-eyed man being a king in the land of blind.”

Stating that his comment was misunderstood as “the words and not their intent” were given more importance, the former IMF Chief Economist said, “As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest growing large economy”.

Rebutting Rajan’s remarks, Finance Minister Arun Jaitley had said any other country would be celebrating at 7.5 per cent growth rate, while Commerce Minister Nirmala Sitharaman had said the RBI Governor should have used better words.

Rajan’s latest comments are being seen as an indirect response to criticism he faced from Union Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman.

Rajan, however, said, “We can’t get carried away by our current superiority in growth, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing. This movie has played too many times in our past for us to not know how it ends.”

Underlining the need to change perceptions, he said a high growth rate can be delivered over a long term only by “implementing, implementing, and implementing”.

“The sobering thought is we have a long way to go before we can claim we have arrived,” Rajan averred, while addressing students at the convocation of the National Institute of Bank Management.

He, however, apologised to the visually-impaired people who were hurt by his use of this proverb.

“I do want to apologise to a section of the population that I did hurt with these words, that is the visually impaired, or the blind,” Rajan said. .

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