The former chief economist at the International Monetary Fund sees the current slowdown as a result of excessive stimulus following the 2008 financial crisis and the subsequent inflation that led to a debilitating credit squeeze.
The way out, according to Mr Rajan, is to push investment so that growth and jobs revive.
This calls for structural changes in the economy, some of which may not pass muster in a coalition government.
The good news is that the United Progressive Alliance is already working on some of the suggestions: raise the savings rate, remove infrastructure bottlenecks, increase financial intermediation and improve the environment for doing business.
In its descriptive part, the survey upholds the government’s view that the economy has bottomed out. The gross domestic product (GDP) is likely to grow in the range of 6.1-6.7% in 2013-14 as agriculture, industry and services all do better than in 2012-13.
The government will manage to contain the fiscal deficit at 5.3% of the GDP this year and has a credible plan to cap this at 3% in the medium term.
Non-food inflation is abating on monetary tightening by the central bank and the process will be augmented by fiscal correction.
Freeing diesel prices and raising duties on gold should rein in the trade deficit but there is little scope for export promotion through tax giveaways.
Industrial revival may take some effort. Services that are in the nature of derived demand will rebound as interest rates dip and economic activity surges.
The survey sees the Goods and Services Tax, which seeks to convert the entire country into a common market, and direct subsidy transfers as significant initiatives that could affect the economy’s supply and demand responses. Both these, however, are still some way off.
Mr Rajan’s signature prescription in the Economic Survey is the section that asks, and tries to answer, the question, “Where will the good jobs come from?”
Well-paying jobs are the best form of inclusion and the survey takes a longer view on the policies India needs to adopt to create enough of them in the next decade in order to absorb its bulging working-age population.
It is difficult to argue against Mr Rajan’s view that the country’s economic management will improve vastly if it addresses this central issue.