‘Rs 65,000 crore needed for poor during Covid-19, we can afford it’: Raghuram Rajan
Rajan said India needs to be clever in lifting the Covid-19 lockdown and open up in measured way as the country does not have the capacity to feed the people for long.Updated: Apr 30, 2020 13:58 IST
Former Reserve Bank of India (RBI) governor Raghuram Rajan has said that India needs Rs 65,000 crore to feed the poor during the Covid-19 pandemic, insisting the country can afford to do that with a GDP (Gross Domestic Product) of about Rs 200 lakh crore.
Rajan also said India needs to be “cleverer in lifting the lockdown and open up its economy in a measured way” as it does not have the capacity to support the people across the spectrum for too long.
Rajan was in dialogue with former Congress president Rahul Gandhi as part of his series of video conversations with global and Indian thought leaders to discuss the Covid-19 crisis and its consequences on the Indian economy.
Asked by Gandhi how much would be required to be distributed among the poor to tide over the crisis triggered by the deadly coronavirus, Rajan replied, “Approximately Rs 65,000 crore. Our GDP is Rs 200 lakh crore and out of that Rs 65,000 crore is not a huge amount. So, we can do it. If this is for the poor and to save their lives and livelihood, we must do it.”
On lifting the lockdown, the former RBI governor said, “We have to be cleverer about opening up...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. It is all too easy to have a lockdown forever, but obviously that is unsustainable for the economy.”
To contain the coronavirus pandemic, Prime Minister Narendra Modi had first announced a nationwide lockdown from March 25 to April 14 and later extended it till May 3.
Rajan agreed with Gandhi that aggressive testing is at the heart of the management of Covid-19. “I don’t think we have to aim for 100% success and have zero cases when we open up. That is unachievable. What we have to do is to manage the reopening so that when there are cases, we isolate them,” he added.
Asked by Gandhi that India is a big country and its ability to test like the United States or the European countries is comparatively limited, the former RBI governor said, “You are talking about 2 million tests a day in India if you have to get the level of confidence that you have in the United States. And clearly, we are nowhere near that. I think we are somewhere around 25,000 or 30,000 tests a day at this point.”
Gandhi and his Congress party have repeatedly urged the government to scale up testing, calling it the biggest weapon against the Covid-19.
Rajan evaded direct responses to questions on centralisation of power and the authoritarian way of governance in India.
“I do believe that decentralisation is important both for bringing more local information to work but also about giving empowerment to the people. What you see across the world is a great sense of disempowerment. Decisions are being made elsewhere, but not by me,” he said.
However, Rajan stressed the need for social harmony, saying India cannot afford to have its house divided in challenging times.
“Social harmony is a public good. Having everyone believe that they are a part of this system, an equal part of the system is essential. We cannot afford to be a house divided especially in these times when our challenges are so big,” he said.
For his part, Gandhi said infrastructure connects people and that gives opportunity, but if there is division and hatred, that disconnects people.
“There is an infrastructure of division and hatred and that causes as big a problem,” the former Congress chief added.
On opportunities after the Covid-19 situation, Rajan said India can help mould dialogue post-pandemic to make space for multi-polar global order. “There will have to be rethinking on everything in global economy once we are out of this pandemic. India can find opportunity for its industry and supply chain in the world. It can also help make its voice heard in the global order,” he added.
However, Rajan sounded caution when Gandhi asked him if India can take advantage of the situation due to pandemic.
“These kinds of incidents rarely have positive effects for any country, in general. There are ways countries can take advantage of. What I think we can say is that there will have to be a rethinking of everything in the global economy once we are out of this,” he said.