India’s economy is expected to recover from its recent slowdown, but growth will still fall short of its full potential, former Reserve Bank of India (RBI) Governor Raghuram Rajan has said. His remarks highlight concerns about structural challenges that continue to hinder the country’s economic performance.
Speaking at a recent event, Rajan noted that while some indicators point to a rebound, factors such as weak private investment, sluggish job creation, and global uncertainties could limit the pace of recovery. He emphasized the need for policy measures that encourage long-term, sustainable growth rather than relying solely on short-term fiscal and monetary interventions.
Despite India’s strong fundamentals, Rajan expressed concerns over income inequality and the uneven distribution of economic gains. He highlighted that while certain sectors, such as technology and services, have shown resilience, manufacturing and small businesses continue to struggle. Addressing these disparities, he argued, is crucial to unlocking the country’s true economic potential.
Rajan also pointed out that external risks, including geopolitical tensions and slowing global trade, could weigh on India’s recovery. Additionally, domestic challenges, such as inflation and financial sector vulnerabilities, require careful management to prevent further disruptions to growth.
To achieve higher and more inclusive economic growth, Rajan stressed the importance of reforms in education, labor markets, and business regulations. He urged policymakers to focus on creating a more competitive environment that attracts investment, fosters innovation, and generates high-quality jobs for India’s growing workforce.
