We are still one of the poorest large countries in the world, says Raghuram Rajan

Raghuram Rajan, Governor, Reserve Bank of India on Wednesday addressed the graduating students at the 12th Annual NIBM Convocation in Pune. Talking about several issues, Rajan said India is one of the poorest large countries in the world on a per capita basis.

He said, "We are still one of the poorest large countries in the world on a per capita basis, and have a long way to go before we reasonably address the concerns of each one of our citizens."

Comparing India to China, he further said Chinese economy which was smaller than ours in the 1960s, is now five times our size at market exchange rates.

"The average Chinese citizen is over four times richer than the average Indian. The sobering thought is we have a long way to go before we can claim we have arrived," he added.

He even warned the country not to be 'euphoric' about the fastest growing economy tag, and said that this performance should be repeated for the next 20 years to ensure a decent living for every Indian.

Rajan said India has under-delivered in the past. "This is why we are still the poorest country on a per capita basis among the BRICS."

"We cannot 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. This movie has played too many times in India’s past for us to not know how it ends," he added.

Rajan also clarified his one-eyed comment at the event.

He said, "my intent in saying 'one-eyed king in the land of blind' was to say that our outperformance is in the midst of global weakness."

He further attacked the media and then the readers.

"In our news-hungry country, however, our domestic papers headlined the phrase I used. To be fair, they also offered the surrounding context, but few read beyond the headline. So the interview became moderately controversial, with the implication that I was denigrating our success rather than emphasizing the need to do more."

He apologized for hurting the blind."I do, however, want to apologize to a section of the population that I did hurt, the blind," Rajan said.

Furthermore, he said we should watch our word wisely before saying anything but we can't spend all our time watching our words and using inoffensive language or hedging everything with caveats, we will be dull and will not be able to communicate because no one will listen.

"For instance, “An eye for an eye will only make the world go blind” could be replaced by “Revenge reduces collective welfare”. The latter is short, inoffensive, and pithy, but meaningless for most listeners," he added.

I think we all have work to do to improve public dialogue, Rajan said.