It is not often the Reserve Bank Governor pronounces upon a socio-political matter that is likely to rub the ruling dispensation the wrong way. But when he does, it is time to sit up and take notice. RBI Governor Raghuram Rajan has again fueled speculations that all is not well between him and the rendra Modi government. His earlier misgivings about the Prime Minister’s Jan Dhan scheme of banking inclusion and the Fince Minister’s insistence on cutting interest rates have been publicly aired. Recently, while addressing the Delhi IIT convocation, Rajan pointedly called for ‘an end to vigilante acts in the pursuit of enforcing bans’, warning that such an atmosphere of intolerance will stifle economic progress. ‘Excessive political correctness stifles progress as much as excessive license and disrespect’, he said, calling for improvement in the environment for ideas through tolerance and mutual respect. Significantly, Rajan has argued that employing more factors of production such as labour and capital, will only take an economy so far. India can grow for some time by putting more people to work, by moving them from low productivity agriculture to higher value-added industry or services, and by giving them better tools to do their jobs. But in the long run, what will really count is ‘putting those factors of production together more cleverly’. This in turn will demand new ideas, new methods of production, better logistics for sustained economic growth. It is here that ‘India’s tradition of debate and the right to have different views will be critical for economic growth’, Rajan pointed out.
Essentially the RBI Governor batted for challenging authority and tradition which would rule out anyone imposing a particular view or ideology through power. Unless ideas are allowed to compete in an open environment, stagtion is inevitable — was Rajan’s message in a nutshell. The RBI Governor’s words of caution have come soon after global rating agency Moody’s warning to Prime Minister rendra Modi that India may lose domestic and global credibility if he doesn’t rein in his flock. In a veiled reference to Sangh Parivar loose cannons, Moody’s said: ‘While PM Modi has largely distanced himself from the tiolist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions’. Projecting the country’s GDP growth rate for September quarter at 7.3 per cent and overall for the full fiscal at 7.6 per cent, the rating agency said that greater potential GDP can be delivered through key economic reforms like land acquisition bill, a tiol goods and service tax (GST), and revamped labour laws. But these crucial reforms bills are likely to get stuck in the Rajya Sabha where the ruling BJP does not have a majority, where the debate has turned away from economic policy to become utterly confrontatiol.
In their latest projections about the Indian economy, the World Bank has forecast a growth rate of 7.5 percent this fiscal, while the IMF believes it will be 7.3 percent. Cautioning that productivity and investment need to accelerate to match the country’s ambitions of double-digit growth, the World Bank has called for addressing the underlying challenges in infrastructure and thereby improve the balance sheets of banks, facilitate doing business in the country, and enhancing the capacity of states and local governments to deliver public services. The IMF has prescribed removing bottlenecks in the power sector, and implementing reforms in education, labour and product markets to raise competitiveness and productivity. It also said the Central government should overhaul its tax system, slash subsidies and introduce market-based pricing of tural resources to boost investment. With the stakes so high, it is indeed unfortute that parliamentary stalemate has made the ruling dispensation and opposition parties ‘go to the people’ with their separate agendas. The country seems to be in permanent election campaign mode as parties outshout each other with divisive rhetoric. Fince Minister Arun Jaitley has now accused the Congress and Left intellectuals of practicing ‘ideological intolerance’ towards the BJP and PM rendra Modi, as well as trying to project India as an intolerant society through structured and organised propaganda, and thereby hurt its growth story. The Congress will surely hit back at the Modi government in the next few days to take the war of words up by another level. The problems of chronic under-development on the ground will remain uddressed unless civil society holds political parties to account.