Former Reserve Bank Governor Raghuram Rajan, who is now a professor of finance at the Chicago Booth School of Business in the US, says India’s high unemployment rate is a real danger, particularly for the lower middle class, as it leaves room for ” corporate politicians who “worry about these divisions” instead of focusing on actually improving jobs.
Rajan said during an interview with Promarket, a publication funded by the Stigler Center at the University of Chicago Booth, that tensions in India could increase if minorities, including Muslims and women, are not part of strong, sustainable and equitable growth.
“Now if we just focus on the Indian growth number we’re not doing too badly apart from the dramatic slump during the pandemic but when you add that female labor force participation is worse than Saudi Arabia – people don’t believe it Trust me when I say this – these are pressing issues that need to be resolved,” he adds.
Regarding the deteriorating economic situation in India’s neighboring countries such as Pakistan and Sri Lanka, Rajan believes that this will have no impact on India, apart from the possibility of economic migration. However, he believes that neighbors who are hungry or don’t have fuel to heat homes or cook food make for a “volatile neighborhood.”
“We have enough problems of our own without a neighborhood that will become more radical,” adds Rajan.
Rajan says India is sending fuel, food and other supplies to the bankrupt nation, but the real concern is that it will only get back a fraction of the money it borrowed for humanitarian reasons. “So there has to be some kind of guarantee from international organizations or other creditors that this money will not be equated with existing debt.”
However, as a matter of goodwill and as a “friend in need,” India should continue to provide things like food, he says.
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