Former RBI Governor Raghuram Rajan bats for measured opening up of economy

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Stating that a second or third round of lockdown will be devastating for the Indian economy, former RBI governor Raghuram Rajan called for reviving it in a measured way in the midst of the Covid-19 pandemic.

Stating that a second or third round of lockdown will be devastating for the Indian economy, former RBI governor Raghuram Rajan called for reviving it in a measured way in the midst of the Covid-19 pandemic.

Rajan's remarks came during a video interaction on the economic crisis due to ongoing lockdown which is scheduled to end on May 3 with Congress leader Rahul Gandhi on Thursday.

He said that it was “all too easy to have a lockdown forever, but that would not be sustainable for the economy”. India does not have the capacity to support people across the spectrum for too long. He said the current priority of the government should to be to keep people alive and provide them food.

“It might cost around Rs. 65,000 crore, but the amount isn't "too much" for an economy of the size of over 200 lakh crore.

He cited the rising unemployment numbers more worrying. "The numbers are really worrying. If you look at CMIE, virtually another 100 million more people have been put out of work as a result of COVID. 50 million through unemployment and 60 million through leaving the labour force," he said.

"I think it says, we need to open up in a measured way but as fast as possible so that people start having jobs. We don't have the capacity to support people across the spectrum for too long. Being a relatively poor country, people start out with significantly lower reserves," he said.

He suggesting sequencing for opening up the economy. “First, places where you can maintain distancing. It is not just distancing in the workplaces, but also distancing to and fro, from the workplace," he added.

"So, a lot of work needs to be done both on creating the structures, as well as ensuring that the workplace is relatively safe. As well as ensuring that if there are accidents, if there are fresh cases, how do we isolate quickly without having to go to a second or a third lockdown? Those will be devastating if we have to go there," he added.

He said India will have to test around 1 million people as per current estimates.

Rajan, who was appointed by the Congress-led government as governor of the RBI in 2013 for a three-year period, is currently a professor at the University of Chicago (with inputs from agencies).

Image Credit: ANI

 

 

 

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