“Further lockdown will be devastating for the Indian Economy,” says former RBI Governor, Raghuram Rajan

INDIA: In a video conversation with former Congress president Rahul Gandhi, the renowned economist & former Governor of Reserve Bank of India, Raghuram Rajan talked about the state of the economy amid lockdown and why it is important to revive it in the midst of the coronavirus pandemic.

While speaking about the impact of the coronavirus pandemic on the economy, he said that a prolonged lockdown would not be sustainable for the economy. And warned that a second or third round of lockdown will be devastating for India’s GDP.

Mr Rajan further said that it is “all too easy to have a lockdown forever”, but that would not be sustainable for the economy.

He cautioned India does not have the capacity to support people across the spectrum for too long. “There has to be a prioritization as our capacities are limited. We need to decide how to keep the economy together so that when we reopen it’s itself able to walk off the sick bed – be impaired at that point. Most immediately, I think to keep people well & alive,” he suggested.

The noted economist pegged the cost of bringing the economy back to life at Rs 65,000 crore, saying that out of India’s Rs 200 lakh crore GDP, this amount is minuscule.

On how India can use the crisis to its benefit, Rajan said, “It is very rare for a country to remain unscathed in such a pandemic. But India can mould in the global order.”

The economist further said India needs to triple its testing capacity. The country will need to conduct about 2 million tests a day to get the USA’s confidence of opening up the economy. “and we are no way near that,” he added.

During the 30 minutes video conferencing, Rajan and Rahul were seen comparing the two nations in terms of testing, opening of the economy and lockdown measures.