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Former Governor of the Reserve Bank of India (RBI) Raghuram Rajan said on Saturday that the Centre should extend fiscal relief that can help rebuild and shield the productive capacity of the economy from the adverse effects of the pandemic, Indian Express reported.
Rajan was addressing a webinar organised by Princeton University’s Bendheim Centre for Finance. He said that India entered into the pandemic with weak economic growth, poor fiscal scenario a legacy non-performing assets from Prime Minister Narendra Modi’s first term.
He also said that the government chose to focus on “BJP’s majoritarian objectives rather than repairing an impaired economy.”
He believes that how India has taken measures to allay the woes caused by the pandemic is not enough when compared to other countries.
He mentioned that providing relief and resources at such time is very important.
“India didn’t fix the house and entered the crisis with a fiscal deficit of 9 per cent or so of GDP and slowing growth. Further with pandemic-related revenue shortfalls and the decline in GDP, this could rise to 13-15 per cent of GDP even without additional spending. Also, the government is focussed on credit rating for fear of downgrades,” he said.
He further added that the economic recovery is going to be slow as emerging markets like India have not been able to provide relief the way other industrial countries have.
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