Why did Raghuram Rajan Say, One Cannot Become Rich with a 6.5% GDP Growth Rate? and How to achieve rapid economic development?

Raghuram Rajan on India GDP Growth: Former Reserve Bank of India Governor Raghuram Rajan has said that even though India’s economy is growing at the fastest pace among the G-20 countries, it is still a poor country. Rajan said, India has a population dividend. A large number of youth are entering the labor market. Only if we are successful in providing employment to them, India will be able to grow at a faster pace. 

Raghuram Rajan interview to American News Channel CNN | 10 POINTS

1. Fast Growth, Still Poor: Despite rapid G-20 growth, India remains poor, says Raghuram Rajan.
2. Population Dividend: India’s youth entering labor market need jobs for faster growth.
3. Economic Ranking: India is now the 5th largest economy, soon to be 3rd.
4. Aging Population: By 2047-2050, India’s aging population could hinder becoming a rich country.
5. Growth Rate: 6-6.5% GDP growth rate insufficient for India to become wealthy.
6. Unemployment: Government’s economic report lacks focus on unemployment, a critical issue.
7. Authoritarian Government: Modi’s government efficient in infrastructure but criticized for minority treatment.
8. Minority Rights: Treating large populations as second-class citizens impedes national success.
9. ILO Report: High unemployment among educated youth, termed as very serious by ILO.
10. Youth Unemployment: 83% youth workforce unemployed, with educated youth unemployment nearly doubling since 2000.

Economic Growth and Aging Population

In an interview to American news channel CNN, Raghuram Rajan said, India has become the fifth largest economy of the world leaving behind Great Britain and will soon become the third largest economy leaving behind Japan and Germany.

Raghuram Rajan said, but the big question arises whether Indians become rich before India becomes an old country or not? Rajan said that by 2047 – 2050, a large population of India will become old, in such a situation, as long as India continues to grow at the rate of 6 or 6.5 percent, India will not be able to become a rich country.

Raising a big question, he said, in the report that the government has recently brought about the Indian economy, there is no mention of the word unemployment. Whereas this is the biggest issue.  

Critique of Modi’s Government

Calling the government led by Prime Minister Narendra Modi an authoritarian government, Raghuram Rajan said, such governments are successful on the front of infrastructure development because they are able to get quick approvals on issues like environment.

On the issue of minorities, Raghuram Rajan said, if any government treats its large population like second class citizens, then that country will never be able to succeed. 

Unemployment Crisis

In fact, the unemployment in the country can be estimated from the fact that recently the International Labor Organization (ILO) has released its report named India Employment Report 2024, in which it has released data on the employment situation among the youth of the country.

The ILO has termed this situation of unemployment in India as very serious. According to the ILO report, due to lack of better quality employment opportunities, the unemployment rate is very high among those youth who have received higher education.

The report states that 83 percent of the youth workforce in the country is unemployed. It was told in this report that the number of youth with secondary or higher secondary education among the total unemployed youth, which was 35.2 percent in 2000, has almost doubled to 65.7 percent in 2022.