By Arré Bench May. 22, 2020
Former RBI Governor Raghuram Rajan said that food grains to the unemployed were not enough to alleviate their troubles. “They need vegetables, they need oil to cook, they need other stuff that means a certain amount of money along with foodgrain. They need shelter,” he explained.
Weeks after appearing for a much-publicised interview with Congress’s Rahul Gandhi, former RBI governor Raghuram Rajan, is back in the news. This time, in an interview with Karan Thappar for The Wire, he spoke about how India is going through major economic catastrophe, and how the government’s special ₹20 lakh-crore economic package to deal with the fallout of the coronavirus lockdown has been inadequate.
India Faces a Major Economic Catastrophe, PMO Can’t Handle By Itself, Says Raghuram Rajan https://t.co/aYK4W19qWt
— M K Venu (@mkvenu1) May 21, 2020
For starters, Rajan said that giving food grains to the unemployed was not enough to alleviate the stress of migrant labourers, who have been stranded for two months with no money or place to call home. They would also need money for milk, vegetables, cooking oil, and to pay rent. “It’s important to both send more money and open food grain. They need vegetables, they need oil to cook, they need other stuff that means a certain amount of money along with foodgrain. They need shelter,” he said.
“Saving people is most important,” he said, adding that various state governments would have to improve living conditions in cities if they want migrant workers to ever return.
Stressing that the government now needed to “pull out all stops”, Rajan also went on to indicate that the current economic crisis had its roots in the time before the pandemic.
“We have had years of economic drift in which our growth has slowed, our fiscal deficit has gone up,” he said. There is a lot more we need to do to put the economy back on track, while simultaneously dealing with the impact of the worsening health crisis, he argued. “The package has some good points but it probably needs to do more.”
For this, he said that the advice of Opposition leaders would need to be taken on board. He didn’t, however, specify any names. “The government must consult opposition talent. It can’t all be done by the Prime Minister’s Office. If more is not done, the economy will be a shadow of its former self,” he tells Thapar in the 40-minute interview.
— Siddharth (@svaradarajan) May 21, 2020
With regard to the loans given out to small industries, Rajan said the MSME sector was one one of the most indebted sectors, and that increasing debt at this point would only add to their woes. “We have to repair places in the economy that need repair,” he said.
In the interview, the economics professor also called for better quality management of public sector banks, and stressed on the need of reviving the construction sector and pushing forcefully ahead with infrastructure projects. Bigger sectors, such as aviation, tourism and motor vehicles should be offered debt relief.
Rajan also briefly spoke about the recent labour reforms that are being passed in various states, such as Uttar Pradesh, Madhya Pradesh and Gujarat, and implied that such moves should not be carried out “with a stroke of a government pen”.
As the country prepares to open up after two months of lockdown, Thursday’s interview is likely to lead to as lively a debate as Rajan’s interview with Rahul Gandhi had a week earlier. Only time will tell whether his advice will be taken on board.