Former RBI Governor Raghuram Rajan has said that India needs to focus on strengthening its job market. He was speaking at the World Economic Forum’s Annual Meeting in Davos. Acknowledging the commendable work done by the Modi government on the infrastructure front, Rajan expressed hope that the upcoming Union Budget would have measures to address job creation, which is critical for boosting consumption and driving economic growth.
Rajan pointed out that India’s economy is growing at a healthy 6%, which, while impressive, may not be enough when considered in per capita terms. He emphasized the need to accelerate growth to meet the aspirations of a young and dynamic population. “The Modi government has done a lot of good work on infrastructure, but the other key pillar that needs focus is the job market,” he said.
As the Union Budget approaches in a matter of days, Rajan felt hopeful that definite measures would be in place to handle this issue at hand. “There is a strong necessity to boost the job market and hopefully, we will see something in the Budget,” he said.
On Rupee And The US Dollar
As it speaks of the erosion of the value of the Indian rupee against the US dollar at a level now touching Rs 85, the RBI governor sought to attribute that more to global factors than India’s. Indeed, he contended that America’s currency gains have been major contributors to currency erosion in various emerging markets; many central banks have had no choice but intervene to prevent this erosion from gathering worse. But as he said with a smile, “It cannot be blamed on the individual”.
“If you are in an emerging market, you are really worried about the dollar. Central banks shouldn’t have to intervene because it’s not their fault,” he stated.
Concerns About Common BRICS Currency
Rajan also did not foresee the possibility of having a common currency for the BRICS (Brazil, Russia, India, China, and South Africa) group anytime soon. The geopolitical tensions that exist, most notably between India and China, as well as the various unique challenges of each member in the bloc, made it quite significant. “For BRICS to have a common currency, we need to sort out many geopolitical issues. I don’t see that happening anytime soon,” he said.
Under the issue of non-central bank digital currencies, Rajan acknowledged the concerns with the potential to weaponize among central banks out of North America and Europe. He was quick to stress that the U.S. dollar remains supreme while its dominance will continue for another 25 years if the world finds unity and continues to be stable.
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