Pune, April 20

India should find ways to support higher economic growth on a sustainable basis and not fritter away gains as it did in the past, central bank Governor Raghuram Rajan said today.

PM Narendra Modi’s two-year old government is seeking to bolster an economy which grew 7.3 per cent, among the fastest growth rates in large economies, but below the eight per cent growth needed to generate jobs for millions of Indians joining the workforce every year.

Rajan said the government had created a platform ‘for strong sustainable growth’, but said it would need to ensure it stays on that path.

The Reserve Bank of India (RBI) governor has cut interest rates by 150 basis points since the start of 2015 to a more than five-year low, but is under pressure to ease further.

“As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest-growing large economy,” Rajan said in a speech to banking and finance students in the western city of Pune.

“Our current growth certainly reflects hard work of the government and people, but we have to repeat this performance for next 20 years.”

Without citing specific instances, Rajan said previous governments had become too complacent by periods of

high growth, saying India still remained a relatively poor country.

“We can’t get carried away by our current superiority in growth, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing,” he added. “This movie has played too many times in India’s past for us to not know how it ends.”

Rajan also defended a comment widely cited by local media last week in which he compared India’s fast-growing economy to being a one-eyed king in the land of the blind — which was seen by some government officials as denigrating India’s success.

Finance Minister Arun Jaitley was quoted by CNBC-TV 18 as saying ‘any other country in the world would be celebrating’ with the rate of growth being posted by India.

Rajan noted his intent was to signal that India’s ‘outperformance was accentuated because world growth was weak’, while also chastising those who stir controversy by misinterpreting his comments.