Former Reserve Bank of India (RBI) Governor Raghuram Rajan said that the Indian economy is facing the 'greatest emergency' since Independence, more acute than the global financial crisis in 2008-09. The workers could still go out to work during the financial crisis as against the current situation, Raghuram Rajan, professor of finance, University of Chicago Booth School of Business, said in a blog titled 'Perhaps India's Greatest Challenge in Recent Times'.
"The global financial crisis in 2008-09 was a massive demand shock, but our workers could still go to work, our firms were coming off years of strong growth, our financial system was largely sound, and our government finances were healthy. None of this is true today as we fight the coronavirus pandemic," Raghuram Rajan added. Possible measures to fight the expected economic crisis were also suggested by the economist.
The government should now plan about how to restart the economic activity in the low-infection regions with enough precautions since lockdown can't be continued for longer periods, Raghuram Rajan said in the blog. The healthy youth could be lodged in hostels near their workplace, practicing adequate distancing, Raghuram Rajan suggested. "Since manufacturers need to activate their entire supply chain to produce, they should be encouraged to plan on how the entire chain will reopen. The administrative structure to approve these plans and facilitate movement for those approved should be effective and quick - it needs to be thought through now," Raghuram Rajan added.
He also raised concerns about the limited fiscal resources. However, the government should still look at spending on the needy, he added, emphasising it was the right thing to do as a humane nation. Meanwhile, on Friday, Prime Minister Narendra Modi urged people to light lamps or candles at 9 pm on April 5 to show their solidarity in the fight against coronavirus. "This Sunday, on April 5, we must all, together, challenge the darkness spread by the corona crisis, introducing it to the power of light.