India: The Health Of The Real Economy Needs To Be Taken Care Of Said Raghuram Rajan

Raghuram Rajan Said, Not the fiscal deficit, but the health of the real economy needs to be taken care of.

India: The Health Of The Real Economy Needs To Be Taken Care Of Said Raghu Ram Rajan

According to Raghuram Rajan, former governor of the Reserve Bank of India, the lockdown in India will not last long but the focus will be on life and livelihood. Initially, there was talk of a 21-day lockdown in the country, but after that, it has been extended from April 14 to May 3. Lockdown measures are taken to prevent coronavirus from spreading in the country. But it has also hit economic growth hard and increased the risk of survival for many people in the country.

In an interview with an all-India channel, Rajan said, "Lockdown in India cannot be permanent. We have to look at both life and livelihood. ” He predicted the 2008 financial crisis three years ago. In his words, "I'm more than ‌ pessimistic, it's a big challenge for India to turn around." Rajan said the government should think about reviving the economy in a state of turmoil and focus on protecting the health of the real economy.

He warned about the fiscal package and made sure that the currency does not fluctuate and interest rates do not rise. As a result, the government has to be careful while preparing the project. Rajan warns that some small and medium enterprises are already crumbling and it is difficult for them to survive. The first step is to look at protecting the real economy, not the fiscal deficit.
In his view, the government needs to make a list of needs and priorities. Rajan suggested that in order to turn the country's financial situation around, it is necessary to keep an eye on the situation so that workers are not laid off. ‌ Even if the salary is cut, at least it should be paid uninterruptedly. Because his argument is that if the way of income of the people is open, there is a possibility of increasing the demand in the market. 

This is exactly what is needed to turn the economy around. He believes that the situation in India may be one of inflation rather than inflation.