'India in growth recession, real estate is in deep trouble'

Raghuram Rajan

New Delhi: Former Reserve Bank of India governor Raghuram Rajan said India is in the midst of a "growth recession" with signs of deep malaise in the Indian economy that is being run through extreme centralisation of power in Prime Minister's Office and powerless ministers.

Penning down his recommendations to help the ailing Indian economy out of the ongoing slowdown in the India Today magazine, he called for reforms to liberalise capital, land and labour markets, and spur investment as well as growth.

He also urged India to join free trade agreements judiciously in order to boost competition and improve domestic efficiency. He said construction, real estate and infrastructure sectors are in "deep trouble" and so are lenders to it like the non-bank finance companies.

The crisis among shadow lenders and a build-up of bad loans at banks have curbed lending in the economy. Rajan said the government should desist from cutting personal income tax rates for the middle-class for now.

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