Differentiating between a defaulter and a fraud, former Reserve Bank of India (RBI) Governor, Raghuram Rajan said, in an interview to the NDTV, that he had flagged off a list of high-profile fraud cases to the PMO during his tenure.
“I’m unaware of where those cases stand. It had a list of the largest frauds. The reason I’m worried is if one gets away with immunity then others may follow.”Raghuram Rajan to NDTV
He also pointed out that "A defaulter is different from fraud. That (default) may be bad luck. If you start putting defaulters in jail then nobody will take any risk.”
During the interview, Dr Rajan also listed the three major challenges faced by the Indian economy – agrarian distress, ailing power sector and the crisis in the banking system.
On RBI VS Govt Row
On the RBI vs government controversy, Raghuram Rajan said there is always pressure on the central bank to pay the government more.
“When I was governor, we paid the highest dividend to the government. But that isn’t the issue any more. The government doesn’t just want the profit, it wants the excess.”Dr Raghuram Rajan to NDTV
On Protecting Institutions
Dr Rajan said there is a need to protect our institutions since India is in a great spot for growth and it will help instil confidence in both foreign and domestic markets that the rule of law is upheld.
On Lack of Jobs
Dr Rajan also spoke about the lack of jobs calling it a “very serious issue”.
He said, “It reflects problems that even 7 per cent growth is not producing jobs. As an example, 25 million applied for 90,000 railway jobs.”
On Demonetisation
Demonetisation slowed down India's economic growth at a time when the world economy was growing and it impacted the GDP significantly, Rajan said.
Rajan said he has seen studies which reaffirm that banning of high value currency notes in late 2016 impacted India's growth significantly.
"I think the net impression is that it (demonetisation) had a significant effect on our growth. And now, I have seen studies which reaffirm that. It has slowed down (our growth).
"...the world (economy) was growing faster in 2017, we slowed down," Rajan said.
In 2017-18, the Indian economy grew by 6.7 per cent.
"That was the twin blow of demonetisation and GST (that impacted India's growth). And before anybody accuses (me) of being anti-GST, it's a good idea in the longer run, but it has short term teething effect," Rajan noted.
When asked if he was asked to implement demonetisation during his tenure as the RBI Governor, Rajan said he was asked for his opinion on banning high value currency notes from the system, which he thought was a "bad idea".
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