India's economy has some bright spots, a number of very dark stains: Raghuram Rajan

Former RBI governor Raghuram Rajan on Sunday said that the Indian economy has 'some bright spots and a number of very dark stains'.

According to him, the 'bright spots' are the health of large firms, the roaring business the IT and IT-enabled sectors are doing, including the emergence of unicorns in a number of areas, and the strength of some parts of the financial sector.

On the other hand, 'dark stains' are the extent of unemployment and low buying power, especially amongst the lower middle-class, the financial stress small and medium-sized firms are experiencing, 'including the very tepid credit growth, and the tragic state of schooling', the noted economist added.

Rajan opined that Omicron is a setback, both medically and in terms of economic activity but cautioned the government on the possibility of a K-shaped economic recovery.

He said the govt needs to do more to prevent a K shaped recovery, as well as a possible lowering of our medium-term growth potential.

A K-shaped recovery occurs after an economic slowdown when some sectors resume growth faster and others lag behind.