Former Reserve Bank of India Governor Raghuram Rajan on Sunday said that the Centre’s goal to make India a $5 trillion-economy by 2024-’25 was “more aspirational than a carefully computed one”, even before the coronavirus pandemic, PTI reported.

In an interview to the news agency, Rajan also warned that the introduction of drastic changes to the monetary policy could upset the bond markets. “I believe the framework [monetary policy] has helped bring inflation down, while giving the RBI some flexibility to support the economy,” Rajan said. “It is hard to think of what would have happened if we had to run such large fiscal deficits without such a framework in place.”

The RBI has the mandate to keep retail inflation at 4%, with a 2% margin on either side. The bank’s Monetary Policy Committee considers this target while deciding on the policy rate. In February, the RBI had kept policy rate unchanged for the fourth time in a row.

Rajan noted that this framework had been helpful in bringing down inflation. “I don’t think it has been costly in slowing growth, and this is probably the wrong time to make drastic changes,” Rajan said. “We risk upsetting bond markets if we make drastic changes in the framework”.

The former RBI governor also weighed in on the 2021-22 Budget, saying that it placed a lot emphasis on privatisation. However, Rajan wondered how the government will deliver on this target. Rajan added that the new Budget was more transparent about spending and there was a degree of conservatism about budget receipts.

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Experts are of the view that India will take a significant amount to time to return to its level of growth before the coronavirus crisis and eliminate the damage caused by the countrywide lockdown imposed in March last year.

However, the Centre says that India’s economic growth picked up pace after the lockdown was lifted, calling it a “V-shaped recovery”.

The Organisation for Economic Co-operation and Development has predicted that India will be among the large economies most severely impacted by the coronavirus crisis and the restrictions imposed to contain it. Data published in the OECD Economic Outlook, Interim Report March 2021 on Tuesday forecast that the real gross domestic product value of India’s economy for the fourth quarter of 2021 will be 7.8% lower than the pre-pandemic prediction.

Data released by the Centre in February showed that India’s Gross Domestic Product growth rate for the third quarter (October-December) of 2020-’21 was 0.4%. With this, the economy once again entered the territory of positive growth after contracting in two successive quarters.

However, the government revised the second advanced estimate for the full financial year 2020-’21 to project a sharper decline of 8%, as compared to the 7.7% contraction it had predicted in the first advanced estimate in January.

Moreover, the contractions in the first two quarters of this fiscal also underwent negative revisions. The 23.9% contraction in first quarter (April-June) has been revised to -24.4%, while the 7.5% decline in second quarter has been revised to -8%.