Rajan’s wishlist: Sell PSU stakes, prioritise spending, boost infra

Former Reserve Bank of India (RBI) Governor Raghuram Rajan says the government should take advantage of the peaks in the Indian equity markets right now and sell stakes in PSUs while prioritising spending to get the economy back on track.

The upcoming Budget should look to provide "relief to the poorer households and small and medium enterprises," he said.

And then move on to getting the economy back on track.

"It (the government) has to prioritise spending which means focus on what is essential" such as relief to poor households and small businesses, he told a TV channel.

Also, the government must look to boost spending on infrastructure as it is "one of the best ways" of getting the economy back on track, he said, according to a transcript of the interview provided by the channel.

And since states do most of such spending, they should get the money, he said.

Rajan said the resources needed for boosting spending can be found from selling public sector units (PSUs).

A "greater source of reducing the deficit (between the revenue generated and expenditure) may be in selling assets," he said.

"I would want to take advantage of the high prices (in the stock market) if I could," he said. On reforms, he said, they were important "but we have to do them in a way that does not prompt a reaction which means much more thought going into them, much more consultation and much less of my way or the highway."

On recovery, he said a strong wave of growth is likely as any country has to grow after being down 25 per cent of GDP.

India, he said, may not be back to the pre-pandemic level till late 2022.

The government, he said, has been attempting some reforms but a lot more is needed as the growth rate was falling even before the pandemic.

"We don't need to focus so much on stimulus when in fact there are parts of the economy which are hurting deeply and need support."