Former bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) governor raghuram Rajan said india is in the "midst of a growth recession" as there is significant distress in the rural economy. The 56 year old economist said the country's fiscal deficit is at an alarming stage, especially in a scenario where India's debt is no longer being eroded by high rates of inflation. He said the country needs fiscal space to deal with legacy problems as well as to channelise resources to its "most needy citizens" in rural areas.
Listing out immediate challenges for the economy, the noted economist said india has to cut back on unneeded spending, become more transparent on the size of the fiscal challenge, and put in place mechanisms that will improve India's fiscal health over the medium term. He said While growth-boosting reforms are being put in place, scarce fiscal resources are perhaps best targeted toward supporting the rural poor-for instance, by bolstering the NREGA programme and by funding rural road construction".