The former RBI Governor, Dr. Raghuram Rajan has called slowdown in the economy 'very worrisome' and said the government needs to fix the immediate problems in power and non-bank financial sectors and come out with a new set of reforms to energise private sector to invest.
Dr. Rajan, who was RBI Governor from 2013 to 2016, also called for a fresh look at the way GDP in India is calculated as he referred to research by the Narendra Modi government's former chief economist, Dr. Arvind Subramanian, about overestimation of growth rate.
'There are a variety of growth projections from the private sector analysts, many of which are perhaps significantly below government projections and I think certainly the slowdown in the economy is something that is very worrisome,' Dr. Rajan said..
India's economic growth has slowed to 6.8 per cent in 2018-19 - the slowest pace since 2014-15, and various projections by private experts and the central bank estimate that the GDP growth in the current year will be less than government estimate of 7 per cent.
In ominous signs that the slowdown may be deep, the auto sector is facing its worst crisis in two decades with reports suggesting thousands of job losses in the automobile and ancillary industry, real estate sector has huge unsold inventory, while fast-moving consumer goods (FMCG) companies have reported a decline in volume growth.
'You can hear businesses all around worrying and complaining out loud that they need some kind of stimulus,' he said. Dr. Rajan said 'a fresh set of reforms' are now needed to boost the economy and growth rate.