Raghuram Rajan dismisses V-shaped recovery, says India needs to grow at 8-9% to create jobs

How do we multiply jobs and is our growth strong enough to help meet that challenge? That's the question former RBI governor Raghuram Rajan feels we should be asking as India claws its way up from pandemic lows.

In an interview to India Today, Rajan delved on the challenges that confront India even as he acknowledges that the picture is mixed and certain sectors have done well while others have struggled to recover.

Dismissing talk of a V-shaped recovery, he said growth after a bad enough downturn will always be V-shaped and the real challenge before the country is to achieve a sustained 8-9% growth.


"India has to do a lot of things to try and get the growth it truly deserves. Where we should be growing is at 8-9%. That's what is necessary to create jobs for the young people coming out," Rajan observed.

India achieved a growth of 8.4% in the second quarter of the current fiscal. It was in line with estimates but came on the back of contraction in the same quarter last year.

The former RBI governor thinks addressing the challenges on the job creation front should be a priority. He said that the population dividend only becomes a dividend when jobs are created.

He underline the fact that India has covered the lost ground in terms of reaching the pre-Covid level but the goal is to get back to the trend level of growth.

"We just made up the ground that we lost in going down but we haven't made up the ground that we lost because we were growing already at a fast pace," Rajan added.

On scrapping of farm laws, he said that one-size-fits-all approach doesn't work and that the overall package wasn't sensitive to the different needs of different regions.

Rajan also said that the rising employment in agriculture sector in low productivity jobs is a worrying thing for a growing economy like India and the focus should be on shifting people to higher productivity jobs.

Calling for more support for the struggling household sector, Rajan said, "Rising agricultural employment suggests people have gone back to their villages and resumed low-productivity jobs because they had no alternatives. Those are the households that are struggling and we have to help them in moving to higher productivity activities to get the jobs that would put India on a much higher plane."