Worried about extent of catastrophe India faces, remarks Rajan

MUMBAI: India is facing a serious economic catastrophe and all hands, including talent outside the government, should be on deck to work its way out of the crisis, according to Raghuram Rajan, former governor of the Reserve Bank of India.

"I'm very worried about the extent of the catastrophe we are facing and this requires all hands on the deck. We need to be working very hard to get out of this and it is very important that we recognise the magnitude of the problem sooner rather than later," Rajan told The Wire.

"We need to do all that it takes to get the economy back on tracks... there are lots of capable people in India, they need to brought in to help the government. It can't all be done by the Prime Minister's Office," Rajan said.

He added that the challenge was not just to repair the damage done by the coronavirus, but reverse the economic drift that had set in three-four years before the virus.

On the package announced by the government, Rajan said much more needs to be done to revive the Indian economy. If more measures are not announced in a year, India will be heavily constrained and a shadow of its for mer self, he said. In spending to protect the economy, India should not be worried about ratings agencies, Rajan said.

"What we need to do is to give investors and the rating agencies the conviction that we are one, and we are doing what is essential to preserve and protect the economy... It is in nobody's interest to see an economy, which is broken emerging from the crisis."

India must also outline steps to put the economy back on the fiscal path once the crisis is over, he said.