FDI More Dependable than FII: Raghuram Rajan

9 Percent GDP will not Occur Overnight

There is a gloom in the global economy and India should try to bring in more investment, create jobs to set the growth path for the economy, Rajan said. "We are certainly experiencing what the world is experiencing in terms of downturn. But of course we have home grown problems also... I think getting just a few things right can stabilize the growth and also move it on the way up," the chief economic adviser of the ministry of finance stated.

He also reminded that the economic growth had slipped to a nine-year low of 6.5 percent in 2011-12 fiscal after recording an over 8 percent growth in the previous two fiscals. The country’s economy is open to worse days and an 8 to 9 percent growth is few years away, he said reiterating the need for rebuilding corporate investment. He also advised that a three-to-four year growth revival plan is required.

In an interview with NDTV profit, he said investment has slowed down and growth revival will be much slower than expected.

Commenting on how the country’s economic growth was downgraded by various rating agencies, he said India fully deserves an investment grade rating. He hoped that the agencies will look at the medium-term plan of the government and will take the right decision.

There is a substantial decline in the domestic investment since 2007-08, he told Siddarth Zarabi of CNBC-TV 18. The key challenge, thus, would be to restore the sense of confidence in them. According to Rajan, the initiatives to meet that challenge have already begun and in the future these domestic investors would put the country on a much better fiscal footing.

Govt must Think of Banking Reforms

While talking with CNN/IBN Live, Rajan said government must now think of banking reforms as well. New entities, at smaller size, should be let enter, which will not be a systemic risk, and which can improve quantum banking. He also said the only thing to worry is that India experiments very little.

Dr Rajan took over as the fifteenth Chief Economic Adviser in the Finance Ministry less than a month ago. He has also served as the Economic Counselor and Director of Research at the International Monetary Fund earlier.