Decentralisation of power” is the cure for India’s coronavirus-induced economic slowdown, according to the country’s former central bank governor Raghuram Rajan.
A professor of finance at The University of Chicago Booth School of Business now, Rajan was speaking to Congress parliamentarian Rahul Gandhi in a video chat streamed on social media.
“Rather than focus on distributing output, focus on distributing opportunities,” he said during the 30-minute session, adding that there is a need to empower local governments, which are better placed to understand the needs of people.
The economist’s statement assumes significance as India’s many states have seen their revenue streams run dry amid the lockdown. Kerala’s finance minister Thomas Isaac said the state had not received its share of April’s taxes from the central government and “there’s no way to really raise funds.” Many states have been demanding more funds from the Narendra Modi government.
Around Rs 65,000 crores will be needed to help the poor in India hit hard by the nationwide coronavirus lockdown, renowned economist Raghuram Rajan told Rahul Gandhi in a video interaction released by the Congress.
The former RBI chief, speaking on the impact of the coronavirus pandemic on the economy, also said a prolonged lockdown would not be sustainable for the economy.
“We will need Rs 65,000 crore, it is not that much. This is to save the lives of the poor,” Raghuram Rajan replied in Hindi to one of the questions asked by the former Congress president.
“How much money will be required to help the poor. Kitna paisa lagega,” Rahul Gandhi had asked.
Mr Rajan said it was “all too easy to have a lockdown forever”, but that would not be sustainable for the economy.
“We need to be cleverer in lifting the lockdown. We need to open up in a measured way as India does not have capacity to feed people for long. We have to manage the reopening so when there are cases we isolate them,” he said.