Chidambaram, Rajan optimistic of India’s economic success

Both spoke at different meets in Washington, DC.

By Deepak Chitnis

Chidambaram
Finance Minister Chidmabaram

WASHINGTON, DC: Indian Finance Minister P. Chidambaram and Reserve Bank of India Governor Raghuram Rajan discussed their country’s economic situation and addressed concerns about India’s future, at separate meets here.

Chidambaram, who was here this past July at the 38th Annual USIBC Leadership Summit, pointed to multiple factors that are either already happening or are going to happen that will signal the return of India’s economic prosperity. He was speaking at an event called “Recapturing India’s Growth Momentum,” which was held at the Carnegie Endowment for International Peace building.

“The Indian economy will grow close to 5.5% in 2013-2014,” he stated confidently. “While the rest of the world may not share our optimism, I say that we don’t share its pessimism.”

Furthermore, Chidambaram talked about India’s demographics, its “increasingly capable financial system,” India’s sophisticated firms and work-force, and the efficiency of India’s democracy as being the key contributing factors to its economic resurgence.

“I know this will be contested,” Chidambaram said of the last factor, saying it has “become fashionable to criticize India’s democracy” in spite of the fact that, at least in his estimation, it “has been working reasonably well.”

Chidambaram also added that “issues that genuinely concern the majority of [the Indian] people become a priority of [Indian] policymakers.”

Rajan
Raghuram Rajan, Governor of the Reserve Bank of India

When asked about what India plans to do about regulatory transparency — something that has been blamed by many for being a critical factor in the so-called “plateauing” of US-India relations — Chidambaram said that there are four main things that need to be addressed: there needs to be enhancements made in the selection process of regulators, the independence and empowerments of the regulators must be changed, and a review system must be initiated for the decisions regulators make, so that there is more oversight and accountability for what they do.

“Our focus is on how to get India out of the headlines,” said Rajan in his opening remarks at the Johns Hopkins Institute’s School of Advanced International Studies (SAIS), just down the street from where Chidambaram was speaking. He likened the general outlook of Indians towards their own economy as being similar to their opinion of their national cricket team: when it’s doing well, it can do no wrong, but as soon as it hits a rough patch like the one it’s currently in, everyone is ready with their torches and pitchforks.

“The underlying problems [facing the Indian economy],” said Rajan, “are small, fixable, and will be fixed […] Success is assured for us getting out of where we are.”

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