Hey 'Rajan': Your claims on Hindu growth rate turned out to be wind, SBI rejected - Newztezz Online

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Tuesday, March 7, 2023

Hey 'Rajan': Your claims on Hindu growth rate turned out to be wind, SBI rejected


SBI Research Report Ecowrap says that looking at the recent figures of the country's gross domestic product (GDP) growth rate and the available data on savings and investment, there is no basis in such statements.

A report by SBI Research on Tuesday termed the statement of former RBI governor Raghuram Rajan, who described India's current growth rate as very close to the Hindu growth rate, as biased, immature and thoughtless . Rejected. Ecowrap, a report by SBI Research, says that looking at the recent data on the country's gross domestic product (GDP) growth rate and the available data on savings and investment, there is no basis in such statements. According to this report, interpreting GDP growth on the basis of quarterly figures is like trying to spread confusion hiding the truth.

Rajan gave this statement

Raghuram Rajan, former governor of the Reserve Bank of India (RBI), had said in an interview to PTI two days ago that the GDP growth figures are indicating that it is dangerously close to the Hindu growth rate. He attributed this to factors like decline in private investment, high interest rates and slowing global growth. The term Hindu growth rate was used for India's average growth rate of 3.5 percent in the decade 1950–80. Indian economist Raj Krishna first used the term Hindu growth rate in 1978.

SBI report denied this

This claim of Rajan has been denied in the report released by the research team of the country's largest bank SBI. The report says, any serious interpretation on the basis of quarterly figures should be avoided. Looking at the recent GDP growth figures and the savings and investment scenario, we find such arguments biased, immature and ill-conceived. The report has been prepared by Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI. Ghosh has said that the investment and savings figures of the past decades underline many interesting aspects.

What does the report say

The report says that the gross capital formation (GCF) by the government increased to 11.8 percent in the financial year 2021-22, while it was 10.7 percent in 2020-21. It also had an impact on private sector investment and it increased from 10 percent to 10.8 percent during this period. According to the report, overall gross capital formation is estimated to increase to 32 percent in the financial year 2022-23. It was 30 percent in the last financial year and 29 percent before that.

Gross savings also increased

Apart from this, gross savings also increased to 30 percent in the financial year 2021-22, which was 29 percent a year before that. It is estimated to be more than 31 percent in the current financial year, which will be the highest level after 2018-19. However, this report says that the potential growth rate of the Indian economy will now be lower than before. Even from that point of view, the GDP growth rate of seven percent is a good rate by any standard.

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