Raghuram Rajan: Higher unemployment can give space to politicians responding to religious divisions: Fmr RBI Guv Rajan

Former Reserve Bank of India Governor Raghuram Rajan says if India’s unemployment rates remain high, it could lead to ‘entrepreneurial’ politicians responding to religious divisions, rather than focusing on real job improvement.

In an interview with ProMarket, Rajan said the higher unemployment rate in the country is a real danger.

“Unemployment rates remain high, especially for the lower middle class, creating more inequality and division, and (room for) enterprising politicians who respond to these divisions. (Maybe they say) ‘let’s focus on reclaiming those old Hindu temples that now have mosques (which are there)’ rather than focusing on improving jobs,” Rajan said.

Rajan said India needs a strong, sustainable and equitable growth agenda that brings all minorities, including women and Muslims, into the fold and takes them on board.

On the growth front, Rajan argued that the Indian economy is not doing too badly.

“If we just focus on the Indian growth number right now, we’re not doing too badly apart from the dramatic drop in the pandemic, but if you add in that women’s participation in the labor market is worse than “In Saudi Arabia, people don’t. Believe me when I say this – these are pressing issues that need to be addressed,” he said.


Lanka Crisis


Indian government has helped debt-ridden Sri Lanka India has provided around $3.5 billion in aid since January. A crippling shortage of foreign exchange reserves has led to long queues for fuel, cooking gas and other necessities, while power cuts and soaring food prices have deepened misery Population.

Rajan said India also provided emergency loans to Sri Lanka when he was governor of RBI, but the situation was not as bad. It was an attempt to help a friend in need.

“India is definitely giving out loans to buy fuel, send food etc. I think the worry from India’s perspective on debt is that Sri Lanka has huge debt and if we’re treated pari passu with everyone else we’ll only get a fraction of that back money that we currently lend for humanitarian reasons. So there must be some sort of guarantee provided by international organizations or other creditors that this money will not be treated on par with existing debt,” he said.

But Rajan argued that other kinds of help, like sending food, are things that India should help with, with the aim that they are needed for goodwill in the neighborhood.

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