There is a possibility of a global recession due to Coronavirus. Meanwhile, Raghuram Rajan, former Governor of Reserve Bank of India, has given some suggestions to avoid the effects of coronavirus. Rajan said that due to the coronavirus epidemic, the country is in the “most emergency phase since independence”. He said that the government should focus on spending on the poor and avoiding less urgent expenditure. Rajan said that if the government insists on running all the work from the Prime Minister’s Office, then it will take more time. People already have more workload there.
Raghuram Rajan said in a blog post written on LinkedIn that it is right to spend on the poor, despite that the government has some problems on the resources front. He said, “Limited resources are a matter of concern for us. However, increasing spending on needy people is necessary at this time. As a nation and to contribute to the war against Coronavirus, it is right. This does not mean that we can ignore our budgetary problems, especially when income will also be affected this year. We are caught in the corona virus crisis at a time when the fiscal deficit is already high and there is a need to increase spending.
Regarding the plan after the coronavirus lockdown, former Governor Rajan said that there is a need to ensure that the poor and low-income middle class are able to live, who are prevented from working for long. The Center and the states will have to form a strategy together and for the next few months will have to put money in the accounts of the economically weaker people through direct benefit transfer (DBT).
Raghuram Rajan said, “During the global financial crisis of 2008-09 there was a huge reduction in demand, but then our workers were going to work, our companies were strong due to years of strong growth, our financial system was in better condition. And the financial resources of the government were also in good condition. While we are still struggling with the corona virus epidemic, some of these are not true. However, he said that if done with proper methods and priority, India has so many sources that it can overcome the epidemic.
He said that the government can also take help from the opposition in this work, who has experience in removing the country from the last global financial crisis. Raghuram Rajan said that to test this epidemic, large scale testing, quarantine and social distancing is needed. The 21-day lockdown is the first step towards fighting the virus, which gave time to prepare.