Regarding the country’s declining economy, former Reserve Bank Governor Raghuram Rajan has advised the Modi government that the Indian economy may decline further if the situation is not yet handled. Raghuram Rajan said that the GDP figures for the first quarter of the year 2020-21 are an alarm for the destruction of the economy. Therefore, the government should be alert.
Former RBI Governor Raghuram Rajan made this suggestion in a post on his LinkedIn page. Rajan said, “Unfortunately the activities which had grown very fast in the beginning, have now cooled down again.”
Rajan has said that the government is following a strategy to save resources to give incentive packages in the future, which is suicidal. The government is thinking that they will give relief packages after the virus is controlled, but they are underestimating the seriousness of the situation. By then, the economy will suffer a lot.
Raghuram has said that if you look at the economy as a patient, then it needs constant treatment. Without the relief package, people will give up food, they will expel children from school and send them to work or begging, pledge their gold to take loans, EMI, and house rent will go up. Similarly, in the absence of relief, small and medium companies will not be able to pay their employees, their debt will increase, and eventually, they will be closed. In this way, by the time the virus is controlled, the economy will be ruined. He demanded an immediate relief package from the government and increased its amount.
Rajan wrote in a post on his LinkedIn page, “Such a huge decline in economic growth is a warning for all of us.” GDP in India declined by 23.9 percent. At the same time, the countries most affected by Covid-19 have fallen by 12.4 percent in Italy and 9.5 percent in America. He said that one of the good things about such a poor GDP figure could be that the official system will now come out of a state of complacency and focus on some meaningful activities. Rajan is a professor at the University of Chicago.”