Raghuram Rajan: Strong Opposition Vital for India's Economic Future

Chennai: The election results indicate a win for Indian democracy and a win for the Indian economy. India needs an economic and democratic course correction and a strong opposition will force the government to change course, said former RBI governor Raghuram Rajan.

“The Indian voter has spoken. And what a wise decision! This is a win for Indian democracy and a win for the Indian economy. Regardless of what happens over the next few days, we will have a strong opposition that forces the government to change course,” Rajan wrote in his LinkedIn account.

India needs to change its economic course. That is less likely if the BJP wins with an overwhelming majority because the party will see victory as an affirmation of its politics. What is more worrying is the subsequent, growing authoritarianism – which shrinks the space for protest and criticism- may continue to grow, and further diminish the likelihood of a course correction. Conversely, if the election produces a strong opposition, no matter its identity, India has a fighting chance of securing the economic future its people desperately want, he said.

India’s economic growth, although seemingly high compared with other countries, has not been large enough, or taken place in the right sectors, to create enough good jobs. India is still a young country, and over ten million youth start looking for work every year. When China and Korea were similarly young and poor, they employed their growing labour force and consequently grew faster than India is today. India, by contrast, risks squandering its population dividend. The joblessness, especially among the middle class and lower-middle class, contributes to another problem: a growing gulf between the prosperity of the rich and the rest.

Education and training are exactly the sorts of services the Indian government should be spending more on. Doing so would enhance the quality of India’s human capital. Services exports have flourished without much help from the government. But the state could do far more to improve the key raw material: the human capital of Indians, he added.