India’s economy is set to recover from recent slowdowns, but growth remains below its full potential, former RBI governor Raghuram Rajan said.

A Bloomberg survey projects GDP growth of over 6% in the December quarter, rebounding from the previous quarter’s seven-quarter low of 5.4%.

Rajan warned that this recovery does not generate enough jobs for India’s growing workforce. While the country has maintained around 6% growth for 25 years, he said it needs at least two percentage points more to meet employment demands.

India will release its October-December GDP data on Friday, following the central bank’s first interest rate cut in nearly five years to support the economy.

He attributed the growth challenge to a skills gap between the workforce and business needs, stressing the need for better training to match job opportunities.

On US tariff threats, Rajan suggested India could negotiate with Washington by increasing oil and defence purchases while lowering politically less sensitive tariffs, benefiting industrial competition.

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