Raghuram Rajan urges govt to chalk out post-virus plan

April 05, 2020 18:04

In a blog titled 'Perhaps Indias Greatest Challenge in Recent Times', former Reserve Bank of India governor and economist Raghuram Rajan has laid out the possible ways to face the huge economic crisis that India may be facing due to the measures taken to curb the spread of the novel coronavirus.

"Economically speaking, India is faced today with perhaps its greatest emergency since Independence," he wrote. According to a report published last week, India is possibly going to risk as many as 13.6 crore jobs due to Covid-19.

"The global financial crisis in 2008-09 was a massive demand shock, but our workers could still go to work, our firms were coming off years of strong growth, our financial system was largely sound, and our government finances were healthy. None of this is true today as we fight the coronavirus pandemic," Rajan said.

Urging the government to start planning the measures that shall be taken post the virus is controlled, the economist wrote, "We should now plan for what happens after the lockdown, if the virus is not defeated. It will be hard to lock down the country entirely for much longer periods, so we should also be thinking of how we can restart certain activities in certain low-infection regions with adequate precautions."

In order to restart the economy, Rajan suggested that healthy youth may be lodged with appropriate distancing in hostels near the work place.

"Since manufacturers need to activate their entire supply chain to produce, they should be encouraged to plan on how the entire chain will reopen. The administrative structure to approve these plans and facilitate movement for those approved should be effective and quick it needs to be thought through now," he wrote.

Talking about the need to pay immediate attention to the poor and non-salaried, he said, "Direct transfers to households may reach most but not all, as a number of commentators have pointed out. Furthermore, the quantum of transfers seems inadequate to see a household through a month We have already seen one consequence of not doing so the movement of migrant labour. Another will be people defying the lockdown to get back to work if they cannot survive otherwise."

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