Rajan’s ‘one-eyed king’ India is growing fastest: Jaitley

Finance Minister Arun Jaitley has virtually rebutted Reserve Bank of India (RBI) Governor Raghuram Rajan’s remarks that India is ‘one-eyed king in the land of blind’, saying compared to the rest of the world, the Indian economy was growing much faster and, in fact, the fastest. 

At 7.5 per cent growth rate, any other country in the world would be celebrating but it is a tribute to India’s growth story that at this rate, “we are still impatient because we know that our potential is to do distinctively better”, he said. Jaitley was reacting to a question by CNBC TV18 on Rajan’s remarks last week that at 7.5 per cent growth rate, India seemed to be ‘one eyed king in the land of blind’.

“Compared to the rest of the world, we are growing much faster, in fact the fastest. Compared to our own potential, we can do better,” he said. On the potential to do distinctively better, Jaitley said, “I see a couple of variables (like good monsoon and reforms) -- if they work to our advantage, we can do much better.” “Assuming we have a moderate monsoon or a good monsoon, I am sure, we will improve upon our growth rates but I see no difficulty in maintaining the present one because of the thrust on the kind of economic activity going on in India, public investment, foreign direct investment, increased demand,” he said.

As regards reforms, he said that the momentum must continue and expressed hope that the Goods and Services Tax (GST) Bill will get through with numbers changing for the better in the Rajya Sabha. 

“So, if legislations like bankruptcy, legislations like GST, we are able to see-through and our ability to impact on investor confidence will also increase,” Jaitley said.

He parried questions on whether the government plans to give extension to Rajan whose term is coming to an end in September but did mention that RBI has done fairly well. These issues are not discussed in the media, he said. In the last one-and-a-half year, RBI has reduced interest rate by 1.50 per cent and the rates can come down further if there is a good monsoon and inflation remains under control. “Once the prices came under control, I think it was incumbent and this was a national expectation that the rates should go down...I am sure, if this trend of containing inflation continues, we can hope for a better interest rate regime which, in turn, will have a spiral effect on improving upon India’s productivity and generate more activity,” Jaitley said.

On the retrospective tax issue concerning Vodafone, Jaitley said, he would not comment on individual cases but asserted that the government has maintained its commitment on levying such kind of taxes. “The government has said there will be no retrospective tax, we lived up to that word. With regards to all pending disputes, people who had unlawful assets outside India, we opened a compliance window, pay more and sleep well.,” he said.