Raghuram Rajan: India’s economy will improve

Rising exports, possibility that US’s problems would be temporary, stronger agri production and revival of stalled projects to aid economy, says RBI chief

Raghuram Rajan says the first signs of revival would likely happen in the sector that went down first – large infrastructure projects. Photo: Abhijit Bhatlekar/Mint 

Mumbai: The news on the economy will only start getting better from now, Reserve Bank of India (RBI) governor Raghuram Rajan said in an interview, reflecting a growing view in many quarters that the Indian economy has bottomed out. He listed the factors behind his assessment: rising exports in the second quarter; the possibility that the US’s problems would be temporary and that lawmakers in that country would arrive at a fiscal deal; stronger agri production; and the revival of many projects that were stalled. 

Rajan added that the first signs of revival would likely happen in the sector that went down first—large infrastructure projects. It was in 2010-11 that “the first large projects started stalling,” he said. When these projects are revived, Rajan said, there are benefits from the actual project itself, the liquidity that is released into the market, and the spillover effect on suppliers, some of whom are medium and small enterprises. The first set of stalled projects were revived in January, he said, and the impact is beginning to be seen now. 

Amit kr. pandey

PGDM - 1ST