Former Rsereve Bank of India (RBI) governor Raghuram Rajan on Tuesday said reforms are likely to be put on the shelf till the next general elections (2019) but expressed hope that the country will move up to a “higher plane of growth” thereafter.
Rajan also raised concerns about employment generation, saying India’s 7.5 per cent growth will not be able create good jobs for the 12 million people coming into the labour market every year.
“I think to some extent, reforms will be put on the shelf till the next election. But post-election, if we can accelerate this pace of reform, there’s no reason why in 2 or 3 years we couldn’t move up to a higher plane of growth,” he said in an interview to a television channel.
Rajan, who is currently a professor of finance at the University of Chicago Booth School of Business, further said India can move up from the 7.5 per cent growth, which is not enough to employ the 12 million people coming to the labour force every year in good jobs. “We can move up to maybe 10 per cent, provide some kind of source of demand for the work. We can do that but I think we need to work on it,” he observed.
Rajan noted that reforms are happening in India but more slowly than one would wish. “That’s potentially the cost of getting political agreement,” he said.
Noting that the world has become less receptive to exports, Rajan said, “So if India becomes a manufacturing giant overnight, who’s going to buy its stuff? So, India needs to think about its pathway of growth, it will be different from China’s.”
Meanwhile, Infosys chairman and Unique ID project architect Nandan Nilekani said the “original rationale” for bank nationalisation has ceased to exist and that privatisation is the way forward the public sector lenders citing the taxpayers’ interest.
Nilekani, who contested the last Lok Sabha polls on a Congress ticket, said banks were nationalised over five decades ago because they were focusing only on big industries and ignoring smaller ones. The 21 state-run banks had suffered reverses because of lending to large companies.
Introduction of technology-based solutions also makes it possible to cater to the requirements of the smaller borrowers, who were neglected in the pre-nationalisation era, the technocrat said.
“The original rationale has gone away and so let most banks function on market principles owned by the general public,” he told reporters, adding privatising them is also in the interest of taxpayers. “We should privatise. We have a choice between some of the value is captured by the taxpayers, by the state or privatisation,” he said, adding it is better to give the upside to taxpayers when state-run banks hold a 70 per cent market share.
The technocrat pointed out that the pace of losing market share has increased and in 10 years from now, they will hold 10 per cent market share.
In a year from now, it will be commonplace for one to make merchant payments for very small purchases like paan by scanning a QR code on your mobile phone, Nilekani said. “There will be a sudden movement to QR-code based payments using the unified payments interface (UPI) in 6-9 months. In a year, payments at the paan shop will happen through this,” Nilekani said.
Nilekani, the architect of the unique ID project Aadhar, said there will be a “massive dissemination” of UPI QR codes in the next few months. He said unlike the card-based payments, merchant payments would be the last level for the UPI journey, which started with peer-to-peer payments.