Former Reserve Bank of India Governor Raghuram Rajan on Thursday said India needed Rs 65,000 crore to help the poor during the Covid-19 pandemic. In a video conversation with Congress leader Rahul Gandhi, Rajan said a prolonged lockdown will not be sustainable for the economy.
“We will need Rs 65,000 crore, it is not that much,” Rajan said, when asked about how much money he thought is needed to tide over the pandemic’s ravaging impacts. “This is to save the lives of the poor.”
Rajan said the government needs to be cleverer in lifting the countrywide lockdown. “We need to open up in a measured way as India does not have capacity to feed people for long,” he explained. “We have to manage the reopening so when there are cases we isolate them.”
The present situation is an unprecedented one and “we need to break norms in order to tackle the crisis, while also keeping in mind the limited resources that we have”, Rajan told Gandhi. “There will have to be rethinking on everything in global economy once the pandemic is under control,” he added.
“India needs a new vision,” Rajan said. “On one hand you have to create elements of creating capabilities such as education, healthcare and infrastructure...However, when we talk about creating these capabilities, we also have to – make no mistake – need to rethink what our industrial and market system looks like. We need to figure out how to go to a place where the ascent is on creating many more new jobs of good quality.”
There will have to be rethinking on everything in the global economy, the economist said.
During the hour-long conversation, Rajan also asked Gandhi how he thought India’s response to the pandemic had been in comparison to that of the United States. The Congress leader replied that he saw deep-seated inequality in India as the biggest difference between the two nations.
“One of the things that annoys me is the level of inequality,” Gandhi said. “A lot of social change is required in India. Different states have different issues. A blanket solution will not work for India.”
Gandhi said there is “an infrastructure of division and hatred and that causes as big a problem”.
Agreeing with Gandhi, Rajan said, “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.”