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New Delhi, Apr 21 () Cautioning people against giving communal colour to the coronavirus pandemic, former Reserve Bank Governor Raghuram Rajan has said such behaviour could explode and make it much harder for different communities to get along. Rajan's comments come in the wake allegations that Tabligh-e-Jamat members violated social distancing guidelines and ignored all instructions by organising a massive gathering last month at their centre in Nizamuddin area of Delhi. The gathering is believed to have emerged as a super-spreader of coronavirus with thousands of cases across the country linked to Jamat members. So far, coronavirus has infected around 19,000 people and took over 600 lives in the country. "We see in India that some allegation that this was a Muslim plot. I mean, that kind of behaviour can explode and make much harder for her communities to get together within her country," Rajan said while speaking at the University of Chicago's virtual Harper Lecture series. Rajan along with 11 others has recently been appointed to an external advisory group of IMF MD Kristalina Georgieva to provide perspectives from around the globe on key developments and policy issues, including responses to the exceptional challenges the world now faces due to the coronavirus pandemic. Rajan, 57, who headed RBI for three years until September 2016, said nationalism that was already pretty strong before the virus is getting accentuated by the effects of COVID-19. Citing an example, he said, "China points finger at the US and says that was US intelligence plot and the US points finger at China and says that this was concocted by China." Rajan, who is currently working as a professor at the prestigious University of Chicago, said no part of the world is immune to COVID-19. "Everywhere in world is going to be affected, (and) global supply chain has been disrupted for some time. In the second quarter of calendar year 2020, we can see decline in GDP by 30-40 per cent," he said. Despite rebound in economic activities in the second half of 2020, global economic growth will still be negative for the year, he said. "I see (global) economic recovery underway a year from now," he noted. BKS CS MKJ

Raghuram Rajan cautions against giving communal colour to coronavirus

<ul><li>Former <keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI governor</keyword> <keyword id="6358908" type="DEFINITION" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> believes that the government’s top priority should be allocating financial resources towards medical supplies required to fight the <keyword id="8829783" type="UNKNOWN" weightage="20" keywordseo="coronavirus-pandemic">Coronavirus pandemic</keyword>.</li><li>He told India Today in an interview that the second priority should be providing assistance to <keyword id="6903191" type="UNKNOWN" weightage="20" keywordseo="poor-households">poor households</keyword>.</li><li>Only when those two things are taken care of should the government think about introducing a monetary or fiscal stimulus to help the economy, Rajan said.</li></ul>Former RBI governor Raghuram Rajan believes that the government’s top priority should be procuring medical supplies to fight the <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">Coronavirus</keyword> pandemic. He said that no expense should be spared in its battle to control the spread of Covid-19. “We need to spend money on medical supplies, ventilators, and masks — on getting protective equipment for medical workers. This means getting resources from private, public, defence, retirement — every resource — and quickly,” Rajan said speaking to India Today. . Rajan explained that even though temporary income support would make sense, the government’s resources are already very limited. “This is not the time to discuss that,” he said about a possible economic and monetary stimulus that the economy might need. However, the finance minister Nirmala Sitharaman on March 24 said that an economic stimulus package would be announced “sooner than later”. She also announced a list of compliances that have been relaxed including delaying IT return filing et cetera. As per Rajan’s list of priorities, the second step should be to address the marginalised sections of the community. Making sure that the livelihoods of poor households — both rural and urban — have enough to sustain themselves. Only when these two critical issues have been addressed, should the government allocate finances towards fixing the economy, according to Rajan. How should the government handle the Coronavirus’ impact on the <keyword id="6356076" type="DEFINITION" weightage="20" keywordseo="indian-economy">Indian economy</keyword>? According to Rajan, everyone is looking at China right now to see if their preventive measures against the spread of Coronavirus will hold. It has already reported a dip of 10% in its GDP during the first quarter. The estimates for Europe and the US also indicate a double-digit fall during the second quarter. When it comes to India, it’s important to make sure that the temporary pandemic shock on the economy doesn’t become a permanent feature, according to Rajan. The downturn of the economy leads to a slowdown in cash flow and takes away the income of workers. He points out that if this carries on for long enough, it could lead to substantial layoffs and firms closing down. “When the Coronavirus is under control, there won’t be a lot of economic activity because those businesses won’t start up again,” said Rajan. He said that even though the government can’t necessarily offer financial support — it can offer partial guarantees and incentivise banks to continue extending credit. See also: <a href="https://www.businessinsider.in/finance/news/no-minimum-balance-use-any-atm-all-the-changes-for-bank-customers-in-india-amidst-coronavirus-related-lockdown/articleshow/74791418.cms">No minimum balance, use any ATM⁠— all the changes for bank customers in India amidst Coronavirus-related lockdown</a> <a href="https://www.businessinsider.in/policy/economy/finance-minister-nirmala-sitharaman-speech-highlights-and-updates/articleshow/74789836.cms">The big announcements from India's Finance Minister Nirmala Sitharaman</a> <a href="https://www.businessinsider.in/india/news/coranavirus-cases-in-delhi-news-and-updates/articleshow/74773842.cms">The third stage of coronavirus spread in India can be delayed but not stopped, says ICMR</a>

Raghuram Rajan says save people before saving the economy

<ul><li>With the upcoming <keyword id="7836802" type="UNKNOWN" weightage="20" keywordseo="Budget-2020">Budget 2020</keyword> on February 1, Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> may not be able to revive economic growth in one stroke, but she can definitely restore confidence among all stakeholders — the consumers, the businesses, and therefore, the investors </li><li>The latest estimate for India’s GDP growth in the financial year ending March 2020 is 4.8%, according to the <keyword id="6366068" type="COMPANY" weightage="20" keywordseo="international-monetary-fund">International Monetary Fund</keyword> (IMF).</li><li>There is a rising clamour for a cut in income tax especially for those lower in the income chain.</li></ul>India went from being the world’s fastest-growing economy to the fastest-slowing economy in just a matter of months. With the upcoming Budget 2020 on February 1, Finance Minister Nirmala Sitharaman may not be able to revive economic growth in one stroke, but she can definitely restore confidence among all stakeholders — the consumers, the businesses, and therefore, the investors. 
 
 
 
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 The latest estimate for India’s GDP growth in the financial year ending March 2020 is 4.8%, according to the International Monetary Fund (IMF). That is too slow for a country where an estimated 12 million young people are ready to take jobs every year. Not just that, IMF’s has had to cut the estimate for India’s growth from 7.5% just about a year ago to 4.8% now. The Indian economy is slowing down so fast, <a href="https://www.businessinsider.in/policy/economy/news/india-is-slowing-down-so-fast-that-even-experts-cant-keep-up/articleshow/72295703.cms">even the experts can’t keep up with it</a>. 
 
 
 
 
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 Make no mistake, India did not wake up to the slowdown suddenly. “It started with commercial vehicles slowing down at the end of last year, then we had passenger vehicles, two-wheelers, white goods, consumer goods, and now we have rural demand. What are we waiting for?” veteran investor Vallabh Bhanshali of the Enam Group warned back in June 2019. Budget is just a statement of accounts but it can inspire confidence The biggest problem that Finance Minister Nirmala Sitharaman needs to address immediately is the lack of confidence. From top corporates to the common man, there is a sense of foreboding. From <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-airtel-and-vodafone-idea-face-more-financial-burden/articleshow/72513282.cms">telecom </a>to <a href="https://www.businessinsider.in/a-third-of-indias-textile-workers-30-million-lost-their-jobs-and-more-could-go/articleshow/70781257.cms">textiles</a>, from <a href="https://www.businessinsider.in/stock-market/news/the-auto-industry-is-shrinking-as-the-world-reaches-peak-car-and-its-dragging-down-the-entire-global-economy/articleshow/71825520.cms">car makers</a> to <a href="https://www.businessinsider.in/budget/news/increase-tax-break-on-home-loans-says-one-of-indias-top-realtors-hiranandani/articleshow/73472902.cms">builders</a>, there are too many sectors neck-deep in crisis.Unemployment is high and the rising prices are making matters worse. From the <a href="https://www.businessinsider.in/indias-government-wants-you-to-believe-that-demonetisation-didnt-slow-down-the-economy/articleshow/67785050.cms">ill-advised Demonetisation</a> to the rushed roll out of GST, the government has been arguing that what it is doing is ‘creative destruction’. But the time for justifications are over because the slowing economy hurts the poor the most, pushing the young among them to starvation and crime; they need money to survive, and confidence to aspire. So what can the <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> government do? The immediate need is to put some money in the hands of consumers. Nearly six months after the<a href="https://www.businessinsider.in/business/news/india-inc-expecting-budget-to-lower-personal-income-tax-rates/articleshow/73555270.cms"> cut in corporate taxes</a>, companies do not seem to be investing more to create jobs because there is no demand. There are many factories or segments within them that are still idle. Lesser tax alone is not enough, companies need people to buy their stuff. There is a rising clamour for a cut in income tax especially for those lower in the income chain. Hope floats that if people have more money they will spend more on essential items of daily use to cars and new apartments. Inflation has to be low but when prices of food items are too low, it hurts the farmers. 
 
 
 
 
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 And that is a big reason for India’s slowdown. Over half the country is dependent on farming for their livelihood in one way or another. When their incomes are curtailed, they tighten their purse strings. And when more than half the country’s population turns penny wise, there will be no aggregate demand for products and services. This will also worsen the income inequality. Those better off will save more, while those down the social strata will face more pressure on their pockets. In the last five years, the average Indian has been earning less while the price rise has been steady. Meanwhile, many <a href="https://www.businessinsider.in/gautam-adanis-wealth-multiplied-nearly-3-times-in-the-last-four-years/articleshow/71304596.cms">top industrialists have multiplied their wealth</a> many times over. This should be a concern for the government too. 
 
 
 
 
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 There is another challenge for Finance Minister Nirmala Sitharaman, even the government has limited money to spend on reviving the economy. Penny-wise and pound foolish Time and again, the government has thrown money ineffectively. One of them at <a href="https://www.businessinsider.in/india/news/slowdown-or-not-these-indias-banks-and-shadow-banks-are-in-trouble/articleshow/71934562.cms">keeping state-owned banks alive without really fixing the problem</a> of inefficiency and corruption that plagues these institutions, that are very necessary. A new crop of unpaid loans have further squeezed the economy. But as <a href="https://www.businessinsider.in/policy/economy/news/raghuram-rajan-gave-ideas-on-how-to-revive-economic-growth-in-india/articleshow/71573594.cms">former RBI governor Raghuram Rajan said</a>, just throwing money is not enough. The government has to take the unpopular decision of letting the bad companies die, and save the good ones that are just hurt by the environment. The bottomline for Budget 2020 Not every problem can be solved in the budget. But the budget will be an important stage for the government to make a statement that can inspire confidence, signal what its priorities are, show transparency in its books, laws, and their enforcement. All eyes will now be on the country’s finance minister Nirmala Sitharaman. And what creative ideas she comes up with to tackle a once-in-a-career crisis. See also: <a href="https://www.businessinsider.in/budget/news/budget-2020-fm-discusses-ways-to-leave-more-income-to-spend/articleshow/73651537.cms">Budget 2020: FM discusses ways to leave more income to spend</a> <a href="https://www.businessinsider.in/budget/news/union-budget-2020-allocation-to-space-exploration-should-be-considered-a-seed-fund/articleshow/73665432.cms">Union Budget 2020: 'Allocation to space exploration should be considered a seed fund'</a>

Watch: India’s ‘make or break’ budget 2020⁠— once-in-a-career crisis offers Finance Minister Nirmala Sitharaman a fertile ground for creativity

<a href="http://www.businessinsider.in/searchresult.cms?query=raghuram+rajan&amp;sortorder=effectivedate">RBI Governor Raghuram Rajan</a> said that any depreciation in <a href="http://www.businessinsider.in/searchresult.cms?query=rupee&amp;sortorder=effectivedate">rupee</a> could lead to increase in <a href="http://www.businessinsider.in/searchresult.cms?query=india+imports&amp;sortorder=effectivedate">imports</a> cost and rise in <a href="http://www.businessinsider.in/searchresult.cms?query=inflation&amp;sortorder=effectivedate">inflation</a>, adding the current position of rupee is pretty reasonable. 
 
During an interactive session at National Institute of Rural Development and Panchayati Raj in Hyderabad, Rajan said any attempt to devalue rupee may lead to a surge in inflationary pressures and "offset any benefits". 
 
"The issue of value of the rupee is a complicated one. Some people think that to increase exports, the answer is devaluing rupee. There are, strictly, ways of doing it (devaluation), but lot of them require significant actions on the financial system that some of our neighbouring countries used for long time," said Rajan. 
 
"It has lot of side effects including...the inflation will pick up in this country if you have to pay significantly more for your imports. You have to pay significantly more for your oil, it will have inflationary impacts. It (devaluation of rupee) may offset any benefits you get from the devaluation. My belief is that today's value of the rupee is pretty reasonable and I don't think we should emphasise moving one way or the other as the answer to any problem," he said. 
 
Meanwhile, Rajan said India had a long way to go to match up with China’s <a href="http://www.businessinsider.in/searchresult.cms?query=GDP&amp;sortorder=effectivedate">GDP</a>. 
 
Rajan said India's growth rate has to be stronger and sustainable to reach Chinese levels. 
 
"China's per capita GDP is about four times of India today. So yes, we have a long way to catch with the level of per capita GDP and that means many years of strong sustainable growth,” he said. 
 
He said India's credit to GDP is 50 per cent, which is significantly below when compared to some of the emerging markets such as China, where the value is 150 per cent.

Rajan: Devaluing rupee can increase import costs, inflation

<ul><li>At the launch of the book in New Delhi, Rajan singled out India’s economic growth data, explaining that 7% plus growth in GDP did not seem plausible in a country where jobs weren’t being created. </li><li>The former RBI governor said that an independent body should be set up to assess and if need be, revise GDP growth estimates. </li><li>Rajan also questioned the viability of <keyword id="1575" type="ORGANIZATION" weightage="20" keywordseo="Congress">Congress</keyword>’s recently-announced basic income support scheme, NYAY.</li></ul> As <keyword id="6358908" type="PERSON" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> hit the promotional circuit for his new book, “The Third Pillar”, he was expected to express his thoughts on the election pledges of India’s two biggest political parties. The former Reserve Bank of India governor, who was known for speaking his mind during his tenure from 2013 to 2016, did not disappoint. At the launch of the book in New Delhi, Rajan singled out India’s economic growth data, explaining <a href="https://timesofindia.indiatimes.com/business/india-business/rajan-raises-doubts-over-7-growth-seeks-impartial-data-examination/articleshow/68588985.cms">that 7% plus growth in GDP did not seem plausible</a> in a country where jobs weren’t being created. In an interview with CNBC TV18, Rajan remarked, “Well, one possibility is that we are not growing at 7%”. The <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> administration has been accused by its rivals of inflating growth data during its tenure and suppressing the <a href="https://www.businessinsider.in/a-hidden-jobs-survey-in-india-casts-doubt-on-data-integrity-under-narendra-modi-government/articleshow/67750383.cms">most recent employment survey</a> that reportedly showed unemployment at <a href="https://economictimes.indiatimes.com/news/economy/policy/report-that-says-unemployment-at-45-year-high-in-2017-18-not-verified-says-niti-aayog/articleshow/67775734.cms">a 45-year high</a>. “I just think that we need now to essentially clean up, find out what in fact is the source of confusion with the new numbers,” the Times of India quoted him as saying. He further added that an independent regulator should be set up to assess and revise the data if need be. 
 
 
 
 
 
 
 
 
 
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 Not surprisingly, it was suggested that his criticism was politically motivated. 
 
 
 
 
 
 
 
 
 
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 Rajan has often been criticised for siding with the <keyword id="190679" type="ORGANIZATION" weightage="20" keywordseo="Indian-National-Congress">Indian National Congress</keyword>. He had served as the chief economic advisor to the previous government led by the Congress. However, that is only half the truth. The fact is Rajan has also questioned the viability of Congress’s recently-announced basic income support scheme, NYAY. The party has promised an annual payment of ₹72,000 to the poorest 20% of the country’s population. "Is it going to be an add-on or substitute a bunch of things? How do we get to the poor?" the <a href="https://economictimes.indiatimes.com/news/economy/indicators/raghuram-rajan-on-what-india-should-vote-for-in-2019-general-elections/articleshow/68578678.cms">Economic Times</a> quoted Rajan as asking. He also said that the government should roll back existing subsidy schemes to fund the programme. Interestingly, Rajan was said to be one of the economists that the Congress <a href="https://www.businesstoday.in/current/economy-politics/nyay-scheme-rahul-gandhi-names-raghuram-rajan-among-economists-consulted-former-rbi-governor-sceptical-about-funding/story/331468.html">consulted </a>when devising the scheme. Finally, Rajan took aim at the <keyword id="14666" type="ORGANIZATION" weightage="20" keywordseo="BJP">BJP</keyword> and Congress’s habit <a href="https://economictimes.indiatimes.com/news/economy/policy/farm-loan-waivers-kill-credit-culture-says-raghuram-rajan/articleshow/68585854.cms">of offering loan waivers</a> as opposed to resolving the actual reasons for farmers distress such as supply chain inefficiencies. In line with <a href="https://economictimes.indiatimes.com/news/economy/policy/farm-loan-waiver-should-not-form-part-of-poll-promises-rajanc/articleshow/67090037.cms?from=mdr">previous statements</a>, he explained that not only are waivers an impediment to <a href="https://www.livemint.com/news/india/farm-loan-waivers-kill-credit-culture-says-raghuram-rajan-1553618274837.html">“credit culture”</a> but they only cover farmers with access to formal banking channels, leaving out poorer farmers who have taken credit from moneylenders. SEE ALSO: <a href="https://www.businessinsider.in/with-a-new-governor-in-place-indias-government-looks-likely-to-get-a-payout-from-the-central-bank-before-the-end-of-financial-year/articleshow/67144051.cms">With a new governor in place, India’s government looks likely to get a payout from the central bank before the end of financial year</a> <a href="https://www.businessinsider.in/indias-bjp-led-government-has-released-a-set-of-revised-gdp-data-that-dramatically-reduces-growth-during-the-previous-administrations-tenure/articleshow/66861828.cms">India’s BJP-led government has released a set of revised GDP data that dramatically reduces growth during the previous administration’s tenure</a> <a href="https://www.businessinsider.in/world-economic-forum-2019-where-raghuram-rajan-says-india-will-be-bigger-than-china/articleshow/67651548.cms">Davos Digest: Raghuram Rajan lifts India's spirit and other stories from the World Economic Forum</a>

Here's how Raghuram Rajan slammed India's two largest political parties

Governor of Reserve Bank of India (RBI) Raghuram Rajan kept the repo rate and <keyword id="3228880" type="UNKNOWN" weightage="20" keywordseo="CRR-unchanged">CRR unchanged</keyword>. 
 Announcing the sixth bi-monthly monetary policy, Rajan said the central bank was still ‘accommodative’ and also looked forward to <keyword id="6360189" type="COMPANY" weightage="20" keywordseo="Union-Budget">Union Budget</keyword> on February 29. 
 
Rajan said the budget needed to support growth and check spending. 
 "The Reserve Bank continues to be accommodative even as it leaves the policy rate unchanged in this review, while awaiting further data on the development of <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword>. Structural reforms in the forthcoming Union Budget that boost growth while controlling spending will create more space for monetary policy to support growth,” said Rajan. 
 
Rajan said the growth had also slowed due to several reasons including stalled projects and dampened exports. He also said the growth would gain momentum by the end of FY17. 
 
The central bank did not factor in the recommendations of the pay panel. 
 
Here are reasons why the RBI maintained status quo 
 
1. Economic activity: On the domestic front, Indian economic activity lost momentum in Q3 of 2015-16, pulled down by dampened agricultural and industrial growth. In the first two months of Q3 of 2015-16, industrial activity slowed due to weak investment. 
 
2. Weak monsoons: The north-east monsoon season ended in December with a deficiency of 23 per cent relative to the long period average (LPA). Rajan stated that rural incomes would continue to be supported by allied activities such as dairy and horticulture, which now contribute as much to <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword> as food grains. “A good monsoon next year could pull the inflation down,” said Rajan. 
 
3. CPI inflation: The CPI inflation rose for the fifth month in December. The CPI inflation, excluding food and fuel, rose for the fourth successive month. 
 
4. Liquidity: The liquidity conditions tightened with advance tax outflows. Rajan said will use all liquidity instruments to ensure sufficient liquidity supply. 
 
5. Exports: Indian exports were in contraction mode for the 13th successive month in December. 
 
6. Global growth: The global growth had slowed. World trade has remained subdued and there were new lows in commodity prices and currency realignments. In the US, an improving labour market continues to support a consumption-led recovery. In the Euro area, core inflation and wage growth were subdued. In China, growth in Q4 of 2015 was the slowest since 2009, pulled down by manufacturing, residential investment and exports. EME commodity exporters confront recessionary conditions, falling currencies, sluggish exports and still high inflation relative to their recent histories.

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Raghuram Rajan cautions against giving communal colour to coronavirus

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