Former RBI Governor Raghuram Rajan spoke to India Today’s News Director Rahul Kanwal on the monstrosity of the coronavirus epidemic and how the Reserve Bank of India (RBI) could reduce the impact of the same.
Considering the existing lack in the Indian economy, Rajan suggested the credit aids should be provided by the RBI to companies facing losses because of the coronavirus. However, he also recognizes that this cannot be done because of the lack of funding. “We have a financial system that is impaired. I have always maintained that we need to clean it up so that it can function as necessary. The problem now is that the RBI can’t provide credit support to businesses,” says Rajan.
Further, he insisted that the Government provide for partial funds, if not entirely. This can be initiated via banks from time to time to ensure that small and large business, by large could cope up with their losses. “At this point, the RBI should take a cue from central banks across the world who are contributing by easing liquidity. Liquidity should not be a constraint. But we need to think carefully as we have large NPAs,” he added.
Additionally, Raghuram Rajan has opened a scheme of his own to provide temporary income transfers to the poor who are severely affected because of this pandemic. He believes that prioritisation is the key to go about it, and a universal scheme should be implemented. Medical facilities should be funded to combat the coronavirus which will slowly, but surely, reduce the mortality rate not just in India but the world.
“In the immediate context, we need to find the necessary supply wherever we can find, even if we have to cajole or push. Since every country is trying to do that, we need to use every way we can to apply pressure and bring-in all that we need,” said Rajan.
Source: India Today