Raghuram Rajan says migrant workers need money for

vegetables, cooking oil, shelter; foodgrains not enough

4 min read 21 May 2020, 07:34 PM ISTPTI
The world is facing the greatest economic emergency and almost any resource is inadequate,
Raghuram Rajan said
 On the economic package mostly relying on extending credit, Raghuram Rajan said loans take
time to work
The Congress on Thursday will release a video of the conversation between senior
Congress leader Rahul Gandhi (left) and former RBI governor Raghuram
Rajan. (MINT_PRINT)
NEW DELHI : Calling India's ₹20.9 lakh crore stimulus inadequate in
providing for recovery of an economy pummelled by covid-19, former RBI
Governor Raghuram Rajan has said the package gives free foodgrains but
migrant workers, rendered jobless by lockdown, need money to buy milk,
vegetables and cooking oil and pay rent.
The world is facing the greatest economic emergency and almost any
resource is inadequate, he said.
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"I think it is particularly so in the case of India because we have years of

economic drift in which our growth had slowed, our fiscal deficit has gone up.
There is a lot more we need to do to put economy back on track. We have to
pull all stop," he said in an interview to Karan Thapar for news portal 'The
Wire'. "The package has some good points but it probably needs to do more."
The former chief economist of the IMF said ways have to be found to give
relief to people and companies affected by COVID and the ensuing
nationwide lockdown.
"We got to repair places in the economy that need repair. This includes some
of the big firms, this includes banks, and of course this includes MSME. We
need to provide for recovery that means some kind of stimulus so as to get
the recovery going. And we need reforms," he said adding the package failed
not just in providing resources for recovery of an economy pummelled by
COVID but also in addressing the distressed faced by sections such as
migrant workers who need money along with foodgrains.
The government has in its economic stimulus package provided for 5 kg of
foodgrain and ₹500 per month for three months to poor women having Jan
Dhan accounts.
Migrant workers who have been left "adrift" after most economic activity in the
country came to a halt following the imposition of a coronavirus lockdown
beginning March 25.
While the government has given free foodgrains, migrant workers need
money, he said.
Giving foodgrains to unemployed migrant workers, the poor and vulnerable
was not enough, he said. They also need vegetables and cooking oil and,
most importantly, money and shelter.
"It's important to both send more money and open foodgrain. They need
vegetables, they need oil to cook, they need other stuff that means a certain
amount of money along with foodgrain. They need shelter," he said. "Saving
the economy, saving people is most important."
Rajan, according to a press release issued by The Wire, said the government
must consult opposition talent as facing a catastrophe of this magnitude
cannot be done by the Prime Minister's Office (PMO) alone.
"We must pull out all stops... if more is not done, the economy will be a
shadow of its former self," he said.
He said the threat to India's economic prospects was such that the
government must consult the best talent in the country and not worry about
who is across the political aisle.
He said the situation could get very ugly and it cannot all be handled by the
PMO.
Rajan said the challenge was not just to repair the damage done by the
coronavirus and the lockdown but the preceding 3-4 years of economic drift.
Asked if a government that was responsible for the drift and doesn't even
accept the economy had been drifting could be the one to battle it, the former
RBI governor said there was a lot of capable talent in the country and the
government should call on it.
Rajan said the task of recovery involved reviving the construction sector and
pushing forcefully ahead with infrastructure development.
Asked what would be the state of the economy a year from now if the
government did not announce further measures, Rajan said it would be
heavily constrained.
He said the government should not worry about what the rating agencies
would do if the fiscal deficit grew because of fiscal measures to heal the
economy and people.
These agencies can be told that increased spending is necessary to preserve
the economy but also that as soon as possible India will return to the path of
fiscal rectitude, he said.
On the economic package mostly relying on extending credit, Rajan said
loans take time to work. Hunger, on the other hand, is an immediate problem.
MSMEs, to whom the government announced credit line as part of economic
stimulus, were one of the most indebted sectors, and loans would only add to
their indebtedness, he said.
Speaking about the big industry and, in particular, segments like airlines,
tourism, car manufacturers, and construction which have been grounded by
the lockdown, Rajan said that while US-style bailouts were not possible,
India's airlines are nonetheless bleeding and the government must offer them
debt relief.
The financial sector, he said, had been in deep distress for a long while before
this crisis struck. It needs re-structuring, re-capitalisation and the hole in the
leaking bucket must be plugged.
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