New Delhi: India’s unemployment numbers are “worrying” and the country needs to open up in a measured way as soon as possible, former Reserve Bank of India (RBI) governor Raghuram Rajan said, in a first-of-its-kind conversation with former Congress president Rahul Gandhi.
In a 30-minute digital conversation released by the Congress party Thursday, Rajan said further lockdowns after reopening could be “devastating”.
The conversation was publicised on Congress’ social media handles with the tagline #RahulShowsTheWay.
Rajan said managing the reopening is important so that if there are fresh cases, they can be isolated quickly.
“So a lot of work needs to be done both on creating the structures, as well as ensuring that the work place 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 said.
If you are forced to shut down again after reopening then it does diminish credibility, he said, stressing that further lockdowns will indicate reopening has not been managed successfully.
In the chat, Rajan, who is now the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago’s Booth School, said ensuring workplaces are safe and how to transport people are all aspects that need to be thought off. He stressed the need for a tremendous expansion in the economy to create good jobs.
Citing unemployment data from the Centre for Monitoring Indian Economy (CMIE), Rajan said 100 million people are being put out of work either through unemployment or exit from the labour force.
“The numbers are mind-boggling,” he said, pushing the need for opening up the economy quickly.
“We need to open up in a measured way and as fast as possible. We don’t have the capacity to support people for a long time as we are a relatively poor country,” Rajan said. “We have seen a progressive decline in our economic growth in the past years especially when there are so many young people.”
Also read: Modi needs to give migrant workers a ‘New Deal’ to get them back to the cities
‘Helping the poor will cost Rs 65,000 crore’
The former RBI governor stressed that while reopening, it is important that the economy is kept together so that it is ready to walk out of the sick bed. For that, it is important that people are kept well and alive, he said, stressing the need to provide food for everyone.
“We can use temporary ration cards so that everyone has access to food. These times are unprecedented and we need to break norms to tackle what is needed,” said Raghuram Rajan.
He estimated that it will take around Rs 65,000 crore to help the poor, but added that it is only a fraction of India’s GDP. “If it is for the poor and it is a thing about saving lives, we should be doing it,” he added.
‘2 million tests a day needed’
The economist said India will need to undertake two million tests a day given the size of its population, if it wants a level of comfort about opening up without risking the spread of the pandemic.
He favoured doing mass testing to reduce the burden on infrastructure while curbing the spread of the pandemic.
“We have to be clever about the reopening,” he said, pointing out that the current 25,000-30,000 tests being done are low.
‘Social harmony a public good’
Raghuram Rajan also said it is important that everyone feels a part of the system, stressing the importance of social harmony as a public good.
“We cannot afford to be house divided especially at these times when our challenges are so big,” he said.
‘Need for decentralisation’
The former RBI chief and Rahul Gandhi spoke about the success of the decentralisation model while dealing with the pandemic.
Gandhi pointed out that southern states with high levels of decentralisation have been more effective in curbing the spread of the pandemic compared to their northern counterparts.
Also read: Graded lockdown exit will make industrial recovery painfully slow, says Anand Mahindra
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Mr. Raghuram rajan is an intelligent and brilliant person…His assessment of the post lockdown situation is serious and must be taken seriously….otherwise consequences of mismanagement of post lockdown time will be intolarable by the country…
2 million tests per day … Yeah that’s feasible
Seriously, I m absolutely sure now that RaghuRajan is a HIGHLY overhyped pawn of NehruKhanDan. His intellect in these very statements defy all his previous BS!!! He n RahulG seem to b of similar IQ…they hold nothing under their Wrappers!!!
He & NehruKhanDan is following a v tight narrative to somehow manage a relaxation in ‘LockDown’ & spoil the Excellent work done by India so far…Rajan had always been a US & IMF guy, as RBI Gov he riddled so many holes in our economy that V r still paying for it.
For his information, Indian Eco is already operating at around 45-50%…so his dream of seeing Modi Govt fail SOMEHOW will remain his
Both are desperate for attention.
India has become a Republic of Beggars.
Everyone is totally dependent on government like beggars for freebies and freeloading. Labourers, migrants, poor, Muslims, industrialists, media houses etc all wants packages, money, house rent and tution fee waving, free food, free ration, free medical facilities andwhat not. Total perversion. No body is paying any attention to the doctors, medical facilities, medical research, medical staff security, medical equipment and supplies. The China Corona Virus has also brought with him the sick mentality of freebies and freeloading, moral perversion and corruption. People have lost all shame even in free loading and free packages.
Why hue and cry for economics, at the time of globalism no one gave thought of protecting Indian infrastructure and industrial growth this so called leaders who wants to be in limelight always try some cheap gimmicks right now we are worried about the health of everyone it’s not the time for how you keep up your wealth intact, Gov who’s responsible for bad debts should not preach a lesson about economics as our PM said jaan hain toh jahaan hai. We Indians are resourceful and we know very well how to handle the crisis we don’t need lessons from political party loyalists like this so called raghuram. Jai Hind.
Bothe Rahul and Raghuramrajan are very intelligent they must run Congo one will be president and another primeminister what a number one fools both of them
Well planned and edited script of only 25 mins of the actual close over 90 minutes “discussion” ? Who knows what else was actually said otherwise.
That the Indian state lacks the – financial – capacity to tide the very poor through a crisis lasting a few months has become clear. Those migrant workers who started trekking home knew exactly what they were doing. It was a sensible, not a panic stricken, response. After blocking them for a month, they have now been permitted to complete their journeys. One cannot really fault Head Mistress Ruhi Tewari for the Report Cards she writes.
Recommend way ahead be implemented in Cong ruled states without delay. Extension of curfew in Punjab till mid May, likely to make industrial revival more cumbersome. Present order to relax curfew for four hours from 7 AM, needs to be further relaxed to avoid crowding in areas Implementation of laid down norms critical.
This is more of politician’s response rather than that of economist’s! After interview with NDTV and now with Rahul, it is becomingly clear that RRR is looking for entry into Indian politics. He knows that no official position will be offered to him so long as BJP is ruling the country. He is therefore offering his ‘expert’ advice on every issue linked directly or indirectly to the economy and keeping himself in the spotlight. He is obviously hoping for Congress revival as soon as possible and then he can hope to be Rahul’s FM. Let us all wish him well. After Shashi Tharoor, he will be a good catch for Congress.
But he should be careful not to offer his full range of expert advice in one go and too so openly; Modi can pick the ideas and package them as his own. Modi is also a leftist at heart in the sense that he knows poor vote for him and he will do everything to keep them voting. But he is also non-corrupt, decisive and fiercely nationalist and communicator who no one can match. And he will not only have Surgical Strike, Balakot or Trump visit to talk about but also his success in managing Corona!
Hope Mr. Rajan used simple language and Year-5 school economics to explain the basics to Mr. Gandhi. Was it a strategic & dynamic conversation?
#RahulShowsTheWay…………… you make your readers laugh.