Rajan: Strengthening liberal democracy is essential for growth, says Raghuram Rajan

Former Reserve Bank of India Governor Raghuram Rajan said on Saturday that India’s future lies in strengthening liberal democracy and its institutions as this is key to achieving growth economic. Warning against majoritarianism, he said Sri Lanka was an example of what happens when a country’s politicians try to hijack a jobs crisis by targeting minorities.

Speaking at the 5th conclave of the All India Professionals Congress, a wing of the Congress party, here, he said any attempt to turn a large minority into “second class citizens” would divide the country.

Rajan was speaking on the theme “Why Liberal Democracy is Necessary for India’s Economic Development”.

“…what is happening to liberal democracy in this country and is it really so necessary for the development of India?…We absolutely must strengthen it. There is today a feeling among some quarters in India that democracy is holding India back… “India needs strong, even authoritarian leadership with few checks and balances to develop and we seem to be drifting in that direction,” Rajan said .

“I believe this argument is totally false. It is based on an outdated development model that emphasizes goods and capital, not people and ideas,” said the Fund’s former chief economist. international currency.

The country’s underperformance in terms of economic growth “seems to indicate that the path we are on needs to be rethought,” he said.

The former RBI Governor further stated that “our future lies in strengthening our liberal democracy and its institutions, not weakening them, and this is in fact essential for our growth.”

Explaining why majority authoritarianism must be defeated, he said any attempt to “make second-class citizens out of a large minority will divide the country and create internal resentment.”

It will also make the country vulnerable to foreign interference, Rajan added.

Referring to the current crisis in Sri Lanka, he said the island nation saw the “consequences when a country’s politicians try to deflect from the failure to create jobs by attacking a minority”.

It doesn’t lead to anything good, he said.

Liberalism was not a religion in its own right and the essence of every major religion was to seek out what is good in everyone, which in many ways was also the essence of liberal democracy, Rajan said. .

Saying that India’s slow growth was not only due to the COVID-19 pandemic, Rajan said the country’s underperformance preceded it.

“Indeed, for about a decade, probably since the start of the global financial crisis, we have not been doing as well as we could have. The main measure of this underperformance is our failure to create the good jobs that our young people need,” the former RBI Governor said.

Citing the strident protests against the Centre’s Agniveer military recruitment programme, Rajan said it suggested how hungry young people were for jobs.

“Some time ago you saw 12.5 million applicants for 35,000 railway jobs. This is particularly worrying when India is experiencing a shortage of jobs, even though so many women are out of work. outside the home. Female labor force participation in India is among the lowest in the G-20 at 20.3% as in 2019,” he pointed out.

Speaking about the “growth vision” of the current government led by Prime Minister Narendra Modi, he said it revolves around the term “atmanirbhar” or self-reliance.

“Now, insofar as it emphasizes better connectivity, better logistics, better roads and devotes more resources to it, this (atmanirbhar’s vision) seems in a way a continuation of the last reformed decades. And that’s fine,” he said.

But, said the former RBI governor, in many ways a look at what ‘atmanirbhar’ is trying to achieve takes us back to an early and failed past where the focus was on physical capital and not about human capital, about protection and subsidies not liberalisation, about picking the favorites to win rather than letting the most capable succeed.

Claiming that there was a misplaced sense of priorities, Rajan said the nation was not spending enough on education, with tragic consequences.

“Many (children) who have not been to school for two years are dropping out. Their human capital, which is their and our most important asset in the years to come, is something that we neglect. fall by not devoting enough resources to remedial education,” Rajan said.