India's economic growth held back due to demonetisation, GST: Former RBI Governor Raghuram Rajan
Washington, Nov 10: Demonetisation and the Goods and Services Tax (GST) are the two major headwinds that held back India's economic growth last year, former RBI Governor Raghuram Rajan has said, asserting that the current seven per cent growth rate is not enough to meet the country's needs.
Addressing an audience at the University of California in Berkeley on Friday, Rajan said for four years -- 2012 to 2016 -- India was growing at a faster pace before it was hit by two major headwinds.
"The two successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off interestingly at a time when growth in the global economy has been peaking up," he said delivering the second Bhattacharya Lectureship on the Future of India.
On the second anniversary of demonetisation on November 8, Finance Minister Arun Jaitley staunchly defended the demonetisation drive, saying 'prophets of doom' have been proven wrong as hard data of two years shows an increase in tax base, greater formalisation of the economy and India retaining the fastest growing economy tag for the fifth year in a row.
"By the time the first five years of this government are over, we will be close to doubling the assessee base," he said in a Facebook blog 'Impact of Demonetisation'.
Jaitley said India clocking the fastest growth rate has proved "prophets of doom", who had predicted that demonetisation will shave off 2 per cent of growth rate, conclusively wrong.
Rajan, in his address, said a growth rate of seven per cent per year for 25 years is "very very strong" growth, but in some sense this has become the new Hindu rate of growth, which earlier used to be three-and-a-half per cent, Rajan said.
"The reality is that seven is not enough for the kind of people coming into the labour market and we need jobs for them, So, we need more and cannot be satisfied at this level," he said.
Observing that India is sensitive to global growth, he said India has become a much more open economy, and if the world grows, it also grows more.
"What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows...Because of these headwinds we have been held back, he said.
While India's growth is picking up again, there is the issue of oil prices, the economist noted referring to the huge reliance of India on import of oil for its energy needs.
With the oil prices going up, Rajan said things are going to be little tougher for the Indian economy, even though the country is recovering from the headwinds of demonetisation and initial hurdles in the implementation of the GST.
Commenting on the rising Non-Performing Assets (NPA), he said the best thing to do in such a situation is to "clean up".
It is essential to "deal up with the bad stuff", so that with clean balance sheets, banks can be put back on the track. "It has taken India far long to clean up the banks, partly because the system did not had instruments to deal with bad debts," Rajan said.
The bankruptcy code, he asserted, cannot be the only way to clean up the banks. It is the only one element of the larger cleanup plan, he said and called for a multi-prong approach to address the challenge of NPAs in India.
India, he asserted, is capable of a strong growth. As such the seven per cent growth is now being taken granted.
"If we go below seven per cent, then we must be doing something wrong," he said adding that that is the base on which India has to grow at least for next 10-15 years.
India, he said, needs to create one million jobs a month for the people joining the labour force.
The country today is facing three major bottlenecks. One is the torn infrastructure, he said, observing that construction is the one industry that drives the economy in early stages. Infrastructure creates growth, he said.
Second, short term target should be to clean up the power sector and to make sure that the electricity produced actually goes to the people who want the power, he said.
Cleaning up the banks is the third major bottleneck in India's growth, he said.
Part of the problem in India is that there is an excessive centralisation of power in the political decision making, he said.
"India can't work from the centre. India works when you have many people taking up the burden. And today the central government is excessively centralised," Rajan said.
An example of this is the quantum of decisions that requires the ascent of the Prime Minister's Office, Rajan said as he highlighted the recent unveiling of the 'Statue of Unity' of Sardar Vallabhbhai Patel as an example of a massive project that required the approval of the PMO.
On the 143rd birth anniversary of Sardar Vallabhbhai Patel on October 31, Prime Minister Narendra Modi unveiled the 'Statue of Unity' in Gujarat's Narmada district.
Touted to be the tallest statue in the world, the 182-metre tall statue was built at a cost of Rs 2,989 crore. The concrete and brass-clad statue is the quickest to be completed in 33 months.
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Metro ridership in Haryana sees over 13 pc rise in 2025-26
Chandigarh (PTI): Haryana's urban transit system witnessed a strong growth in 2025-26, with metro ridership registering a robust 13.55 per cent increase, the state government said in a statement on Thursday.
The progress was reviewed in the 64th board meeting of Haryana Mass Rapid Transport Corporation (HMRTC) chaired by Chief Secretary Anurag Rastogi.
Between April 2025 and February 2026, the metro network recorded over 1.74 crore passengers, compared to 1.53 crore in the corresponding period the previous year.
July recorded the highest monthly growth at 22.93 per cent, while all months showed consistent positive trends.
Financial performance has also remained strong, with fare revenue rising 12.64 per cent till January 2026, the statement said.
Non-fare revenue surged by 108 per cent, driven by effective monetisation of station spaces, advertisements and commercial activities, resulting in an operating surplus for Rapid Metro.
Further initiatives, including the auction of station naming rights and additional advertisement sites, are expected to strengthen HMRTC's financial position, the statement said.
Appreciating the performance, Rastogi stated that the consistent rise in ridership and revenue reflects the success of Haryana's integrated transport strategy, rising commuter confidence and a clear shift towards public transport.
HMRTC Managing Director Chander Shekhar Khare said that, alongside operational gains, the state is making steady progress on an ambitious pipeline of metro and regional transit projects.
Metro connectivity from Gurugram Sector 56 to Panchgaon is under active consideration, with Haryana State Industrial and Infrastructure Development Corporation Limited studying the Detailed Project Report (DPR) and layout plan, and finalising a depot location in Sector 36A near Sihi village, he said.
The Gurugram-Faridabad Namo Bharat corridor has achieved a key milestone, with alignment and station locations finalised and approved by the Haryana government. The National Capital Region Transport Corporation is preparing the DPR, he added.
Similarly, the Delhi-Kundli metro extension is proposed to be placed before the Haryana Cabinet for approval.
The 136.3-kilometre Delhi-Panipat-Karnal RRTS Corridor has also progressed, with the revised DPR submitted for financial concurrence ahead of Haryana Cabinet consideration.
Within Gurugram, DPR preparation has been approved for key intra-city corridors, including the 17.09-kilometre Bhondsi-Subhash Chowk-Rajeev Chowk-Sohna Chowk Railway Station corridor, enhancing connectivity along Sohna Road, Khare said.
