Raghuram Rajan's concern: ‘Will Indians become rich before India grows old?’— ex-RBI governor on demographic dividend

Former Reserve Bank of India (RBI) governor and renowned economist Raghuram Rajan recently posed a thought-provoking question during an interview with CNN, “Will Indians become rich before India grows old?” 

While reflecting on India's unemployment situation, Rajan observed. “Even if India is the fastest growing economy in the G20, it is also the poorest country. Young people are coming into the labour force in massive quantities. If we could employ them, India would grow much faster.”

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He pointed out that India is currently benefiting from its demographic dividend. He emphasised that the economy can reap the potential benefits of economic dividend if the young workforce that India has can be effectively employed.

The former RBI governor also compared India with China, the second-largest populous country in the world. He noted that India has recently surpassed the United Kingdom in terms of overall GDP and has become the fifth-largest economy globally. India's performance on the global scale seems good in comparison to rich countries. 

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“Also, we have a large population, so we are overtaking countries in terms of overall GDP… Soon, India will overtake stagnant Japan and Germany to become the third-largest economy, ” he noted. 

However, he stated that "the real issue is: Can Indians become rich before India grows old?”

Raghuram Rajan expressed concern over India's demographic transition, stating that by 2047-2050, India's demographic bulge will translate to an ageing population. He pointed out that a growth rate of 6-6.5 per cent would not be sufficient to ensure prosperity. He added, "By 2047-2050, we are going to start growing old. Are we going to be rich by then? Not at 6-6.5 per cent growth.” 

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He also pointed out that an authoritarian government is more successful in infrastructure development, referring to the BJP-ruled government led by Prime Minister Narendra Modi. However, the needs of a major chunk of the population should be addressed timely. "No country has ever succeeded by treating a large part of its population as second-class citizens," Rajan said.

"They should get the sense of progress, that things are getting better. You cannot reverse the environment of equality that India has enjoyed since independence,” he opined.