India's future lies in strengthening liberal democracy and institutions: Raghuram Rajan

Raipur (Chhattisgarh) [India], July 30 : The notion that democracy holds back economic development is wrong and India's future lies in strengthening its liberal democracy and institutions, former RBI Governor Raghuram Rajan said.
"There is a feeling among some quarters in Indian society today that democracy holds back Indian group, India needs strong even authoritarian leadership with few checks and balances on it to grow. We seem to be drifting in some direction. I believe this argument is totally wrong. It is based on an outdated model of development that emphasises goods and capital, not people and ideas," Rajan said here.
Explaining the economic rationale of liberal argumentative democracy, Former RBI governor said, "India is a bounding today though the consequences of war in Ukraine. Inflation, rising interest rates around the world are all casting a shadow, now any growth we have should be celebrated but we can't ignore the fact the rebound that we have is from disastrous number posted in last two fiscal years."
Talking to ANI, Rajan said India has sufficient foreign exchange (forex) reserves, external debts are low and the country is not having the economic problems like Sri Lanka and Pakistan.
"We have sufficient foreign exchange reserves. RBI has done a good job in increasing the reserves. We are not having problems like Sri Lanka and Pakistan. Our foreign debts are also less," Rajan told ANI.
According to the latest RBI data, India's foreign exchange (forex) reserves stood at $571.56 billion for the week ended July 22.
At end-March 2022, India's external debt stood at $620.7 billion, as per the latest RBI data. The external debt to GDP ratio declined to 19.9 per cent at end-March 2022 from 21.2 per cent at end-March 2021.
According to Rajan, low foreign debt and high foreign exchange reserves make Indian economy resilient. The countries like Sri Lanka and Pakistan are facing deep financial troubles due to very low forex reserves and mounting external debts.
Usable forex reserves of Sri Lanka recently dipped below $50 million forcing the country to suspend payments on foreign loans. The situation in Pakistan is equally bad. Pakistan's forex reserves dipped by $754 million to $8.57 billion for the week ended 22nd July 2022, as per Pakistan central bank's latest data.
On inflation, Rajan said the hike in policy rates by the Reserve Bank of India would help in reducing the inflationary pressure.
At present, there is inflation all over the world. RBI is increasing interest rate which will help in reducing inflation. Most inflation is in food and fuel. As we can see food inflation is coming down in world & will decrease in India also, he said.
The former RBI governor said fuel and food have been among the major factors for high inflation.
He said high food inflation has been due to seasonal factors and are likely to come down.
According to Rajan, the hike in policy rates by the RBI would help in bringing down core inflation.
India's retail inflation eased to 7.01 per cent in June from 7.04 per cent in the previous month helped by softening crude and edible oil prices, according to data released by the National Statistical Office (NSO) recently.
The RBI has hiked policy repo rate by 90 basis points or 0.90 per cent since the beginning of the current financial year.
In its off-cycle monetary policy review announced in May the central bank hiked policy repo rate by 40 basis points or 0.40 per cent to 4.4 per cent. This was the first increase in policy repo rate in nearly two years. The repo rate is the interest rate at which the RBI lends short-term funds to banks.