Fall in GDP alarming; time for bureaucracy to take meaningful action: Raghuram Rajan
NEW DELHI: Terming the 23.9 per cent fall in the economic growth in June quarter alarming, former Reserve Bank governor Raghuram Rajan has said bureaucracy should come out of complacency and take meaningful action.
The current crisis requires a more thoughtful and active go nment, he said, adding "unfortunately, after an initial burst of activity, it seems to have retreated into a shell."
"The sharp decline in economic growth should alarm us all. The 23.9 per cent contraction in India (and the numbers will probably be worse when we get estimates of the damage in the informal sector) compares with a drop of 12.4 per cent in Italy and 9.5 per cent in the United States, two of the most COVID-19-affected advanced countries," Rajan wrote in a post on his LinkedIn page.
He further said the bureaucracy needs to "be frightened out of their complacency and into meaningful activity. If there is a silver lining in the awful GDP numbers, hopefully it is that."
Rajan, currently a professor at the University of Chicago, said the COVID-19 pandemic is still raging in India, so discretionary spending, especially on high-contact services like restaurants, and the associated employment, will stay low until the virus is contained.
The eminent economist pointed out that the go nment's reluctance to do more today seems partly because it wants to conserve resources for a possible future stimulus.
"This strategy is self-defeating," he opined.
Emphasising on the importance of go nment relief or support in the current scenario, Rajan said, "Without relief measures, the growth potential of the economy will be seriously damaged."
He said Brazil, which has spent tremendously on relief, is seeing a much lower downgrade to medium term growth than India. "So, go nment officials who hold out the possibility of a stimulus when India finally contains the virus are underestimating the damage from a more shrunken and scarred economy at that point," Rajan noted.
Citing an example, Rajan said if one thinks of the economy as a patient, relief is the sustenance the patient needs while on the sickbed and fighting the disease.
"Without relief, households skip meals, pull their children out of school and send them to work or beg, pledge their gold to borrow, let EMIs and rent arrears pile up. Essentially, the patient atrophies, so by the time the disease is contained, the patient has become a shell of herself," he noted.
The former RBI governor further said if one thinks of economic stimulus as a tonic, "when the disease is vanquished, it (stimulus)can help the patient get out of her sickbed faster. But if the patient has atrophied, stimulus will have little effect."
Rajan stressed that the recent pick-up in sectors like auto is not an evidence of the much awaited V-shaped recovery.
"It reflects pent-up demand, which will fade as we go down to the true level of demand in the damaged, partially-functioning, economy," he noted.
译文来源：三泰虎 http://www.santaihu.com/p/50756.html 译者：Jessica.Wu
Dr Vinay Kumar
This person should stop poking his nose in the practical affairs of economy based on his bookish useless knowledge. The introducer of phone banking is providing cover fire to pappu.
Dr Vidyadhar Yellutla
Countries GDP is an added total of state GSDPs, when Mumbai the economic cpaital of India was locked down, how can you see GDP adding to a huge total? Looks like NCP, Congress and Udhav wanted to destroy Indias ecconomy to make equal to Pakistan.
Oh, why dont you shut yup?? when you had the opportunity you squandered it Mr Newton!!!
When he was RBI cheif Governet. India economy flourished. Now since MOdi came it's going down, it's a fact. We were in slow down since 2018 JAN..
Gives us a break Raghuram Govind Rajan, keep your ideas to yourself! This virus is still not done. You wanted a stimulus in April, then a May and then... Its now September and the virus has still not gone. a stimulus ahead of time will simply be spent with no economic benefit! Speak to Rahul Gandhi, he's the only idiot who will entertain you now!
Mr Rajan, Are you economist or Politician ?
Suggest to Trump.....not India.....US ka dalal...Even Obama called our PM to keep him before he was thrown out.
Raghuram Raman’s analysis is correct.
Oh really? lol so why is he UNEMPLOYED? hhahahaha
Bhai tu rehne de divide n rule mat kar!! GDP contraction is across the Globe, why single out my Country.
This man is worse than a politician
Mahila Utthan Samiti MUS
Yes, he tells the truth. Unforgivable.
We are a Banana Republic we are not bothered about Negative GDP, Agrarian Crisis, Highest Unemployment ever, Economy in tatters etc.
Rajan you are a Moron... you worry about your college first... There are many better people in India to worry for the GDP.
Will u please keep quiet and enjoy ur life in the US... we ll manage ourselves
Mr Rajan, do you have guts to tell same thing to American President or UK PM? Their GDP is also slipping big time!!
India will see 1000% growth in gdp after ram mandir is made.
We will surpass usa in one year.