How much damage has the corona virus caused to the country’s economy that has already fallen into the trough, and what should be the roadmap to overcome it? Also, how much money is needed for the country’s poor to overcome the current crisis? After all, what are the problems that need immediate attention. On all these issues, former Congress President and MP Rahul Gandhi had a long dialogue with well-known economist and former RBI Governor Dr. Raghuram Rajan. Read this conversation between the two:

Rahul Gandhi – Hello

Raghuram Rajan – Good morning, how are you?

Rahul Gandhi – I’m good, nice to see you

Raghuram Rajan – Me too

Rahul Gandhi – In the era of Coron virus, there are many questions in the mind of the people, what is happening, what is going to happen, especially with regard to the economy. I thought of an interesting way to answer these questions, to talk to you about it so that I as well as the common people can know what you think about all this.

Raghuram Rajan – Thanks for talking to me and for this dialogue. I believe that at this critical time, as much information as possible can be obtained on this issue and it should be conveyed to the people as much as possible.

Rahul Gandhi – What I think is a big issue right now is how do we open the economy? What are the parts of the economy that you think are very important to open and what should be the way to open them?

Raghuram Rajan – This is an important question. Because as we are trying to bend the curve of infection and prevent congestion in hospitals and medical facilities, we need to start thinking about resuming people’s livelihoods. It is very easy to put a lockdown in the long run, but obviously it is not good for the economy.

You do not have a fixed security. But you can start opening up areas that have relatively few cases, with the thought and policy that you will be screening people as effectively as possible and when the case comes up, you will try to stop it and make sure We will do everything to stop it.

It should have a sequence. First of all, places have to be marked where the distance can be maintained, and this should not only apply to work places, but also to and from work. Transport structure has to be seen. Do people have private vehicles. They have bicycles or scooters or cars. Everyone has to see them. Or people come to work from public transport. How will you ensure distancing in public transport.

It will take a lot of work and hard work to make all this arrangement. At the same time, it has to be ensured that the workplace is relatively safe. Along with this, it has to be seen that if there are no accidental cases coming up accidentally, then how fast we can isolate people without implementing the third or fourth lowdown. If this happens, there will be a crisis.

Rahul Gandhi – Many people say that if we end the lockdown in a phased manner. If we open now and then are forced to lockdown twice. If this happens, it will be very dangerous for the economy because it will completely destroy trust. Do you agree with this?

Raghuram Rajan – Yes, I think it is right to think. Talking about the second lockdown, it means that we were not fully successful in the first time. This raises the question that if opened this time, then there will be no need for a third lockdown and this will bring credibility.

With this I would like to say that we talk about 100 percent success. That is, there should be no case anywhere. That is difficult to achieve at the moment. In such a situation, what we can do is to start removing the lockdown and isolate it wherever the case appears.

Rahul Gandhi – But in this entire arrangement it will be very important to know where there is more infection. And testing is the only way for this. At the moment there is a feeling in India that our testing capacity is limited. In a large country, our testing capacity is limited compared to the US and European countries. How do you see a small number of tests taking place?

Raghuram Rajan – Good question. Take the example of an American. There are up to one and a half lakh tests in a day. But the experts there, especially the experts of infected diseases, believe that this capacity needs to be tripled, that is, if you have 5 lakh tests per day, then you think about opening the economy. Some are talking about testing up to 10 lakhs.

Given India’s population, we should test it four times. If you want to reach the US level, then we have to do 2 million tests daily. But we are still able to do only 25-30 thousand tests.

Rahul Gandhi – See, now the effect of the virus is there and after some time the economy will have an impact on the people. It will be a setback that is going to happen in the next two months. How can you balance the fight with the virus and its effects over the next 3-4 months?

Raghuram Rajan – You have to think on these two now. You can’t wait for the effects to come out. Because on one side you are fighting the virus, on the other side the whole country is in lockdown. Surely people have to provide food. The homes have to see the status of the migrants who have left, they need shelter, medical facilities. This needs to be done all at once.

I think it has to be set priorities. Our capacity and resources are both limited. Our financial resources are very limited compared to the West. We have to decide how to handle both the fight against the virus and the economy simultaneously. If we open now, then it will be like that we have come out of bed from illness.

The first thing is to keep people healthy and alive. Food is very important for this. There are places where PDS has not reached. Amartya Sen, Abhijeet Banerjee and I talked about the temporary ration card while talking about this subject. But you have to see this epidemic as an extraordinary situation.

We need to think out of the box for what is needed. Decisions have to be made keeping in mind all budgetary limitations. We do not have many resources.

Rahul Gandhi – What do you think about the agricultural sector and the workers? What do migrant laborers think about. What should be done about their financial status?

Raghuram Rajan – In this case, direct benefit transfer is the way right now. Let us think about all the arrangements by which we reach the poor. We adopt many methods in widow pension and MNREGA itself. We have to see that these are the people who do not have employment, who do not have the means to livelihood and we will help them for the next three-four months as long as this crisis is there.

But, in terms of priorities, it would be most beneficial to keep people alive and not force them to go out in the midst of a lockdown in protest or in search of work. We will have to find ways through which we can reach more and more people and also provide them food through PDS.

Rahul Gandhi – How much money will Dr. Rajan spend to help the poor, to directly deliver cash to the poorest?

Raghuram Rajan – About 65,000 crores. Our GDP is 200 lakh crore, removing 65,000 crore from it is not a huge amount. We can do this. If this saves the lives of the poor, then we must do this.

Rahul Gandhi – India is in a difficult situation right now. But can India have any major strategic advantage after the Kovid epidemic? Will there be some change in the world that India can take advantage of? How do you think the world will change?

Raghuram Rajan – Such situations rarely bring good conditions for a country. Nevertheless, there are some ways in which countries can benefit. I believe that after coming out of this crisis, the global economy needs to think in a whole new way.

If there is any chance for India, that is how we communicate. In this dialogue, we should think more than a leader because it is not a matter between two opposing parties. But India is such a big country that we should be heard well in the global economy.

In such a situation, India can find opportunities in industries, can find opportunities in its supply chain. But the most important thing is that we turn the dialogue in a direction that includes more countries, multi polar global system and not two polar system.

Rahul Gandhi – Don’t you think there is a crisis of centralization. The power has become so centralized that the negotiations have almost stopped. Interaction and dialogue solve many problems. But this communication is breaking due to some reasons.

Raghuram Rajan – I believe that decentralization is important not only for exposing local information but also for empowering people. It is the situation all over the world that decisions are being made elsewhere.

I have one vote to choose someone remote. I can be a panchayat, I can be a state government. But there is a feeling among people that their voice is not heard in any case. In such a situation, they become victims of different powers.

I will ask you the same question. The impact of the Panchayati Raj that Rajiv Gandhi brought and how much it proved to be beneficial.

Rahul Gandhi – It had a tremendous impact, but sadly, it has to be said that it is decreasing now. On the Panchayati Raj front, we are returning from the progress that was done, and we are going in a district based system. If you look at the South Indian state, there is good work happening on this front, decentralization of the systems is taking place. But centralization of power is taking place in North Indian states and the powers of panchayats and land-related organizations are diminishing.

The more people the decisions are taken together, the more able they will be to monitor the decisions. I believe this is an experiment that should be done.

But why is this happening globally? What do you think is the reason that centralization is happening on such a large scale and the dialogue is ending? Do you think there is something at the center or there are many reasons behind it?

Raghuram Rajan – I believe that there is a reason behind this and that is the global market. It has become such a belief that if the markets are being globalized, then the firms participating in it also apply the same rules everywhere, they want the same system everywhere, they want the same type of government, because it gives them confidence Increases.

Local or national governments have taken away their rights and powers from the people in an attempt to bring uniformity. Apart from this, there is a craving for bureaucracy that if I can get power, I can get power, then why should I not get it. It is an ever-increasing craving. If you are giving money to the states, then there are some rules that you will get money only after obeying it and not without question you will get money because I know that you too have come by choosing. And you should get a sense of what’s right for you.

Rahul Gandhi – A new model has arrived these days, that is the authoritarian or authoritarian model, which questions the liberal model. This is a completely different way of working and it is flourishing in more places. Do you think it will end?

Raghuram Rajan – I do not know. The authoritarian model, a strong personality, a world in which you are powerless, all of this is a very disturbing situation. Especially if you have a connection with that personality. If you think they believe in me, they care about people.

The problem with this is that the rightist personality creates a belief in itself that, ‘I am the manpower’, so whatever I say will be correct. My own rules will apply and there will be no investigation, no institution, no decentralized system. Everything should pass by me.

Looking at the history, it will be known that whenever centralization has taken place to this extent, the systems have collapsed.

Rahul Gandhi – But there is something very wrong in the global economic system. It is clear that this is not working. Is it correct to say so?

Raghuram Rajan – I think it is quite right that this is not working for many people. The uneven distribution of wealth and income in developed countries is certainly a cause for concern. Uncertainty of jobs, the so-called uncertainty is another source of concern. If you have a job today, it is not known whether you will have a source of income tomorrow.

We have seen in this era of epidemic that many people have no employment. Both their income and security have been snuffed out.

Therefore, the situation today is not just a problem of slowing down the growth rate. We cannot just depend on the markets. We have to develop. We are also distressed by the inadequate distribution problem. Whatever development happened, people did not get the results. Many people missed. So we have to think about all this.

That is why I think we have to think about distribution system and distribution opportunities.

Rahul Gandhi – It is interesting when you say that people connect with infrastructure and they get opportunities. But if there are divisive things, there is hatred that people do not associate with. This too is a kind of infrastructure. At this time the infrastructure of the division has been erected, the infrastructure of the hatred has been erected, and this is a big problem.

Raghuram Rajan – People benefit from social harmony. People need to feel that they are part of the system. We cannot be a divided house. Especially in such challenging times. So I would like to say that the constitution that our fathers, the nation makers wrote and the rule given at the beginning, needs to be read and learned afresh. People now feel that there were some issues that were sidelined, but those were the issues that would have been teased, all our time would have been spent fighting each other.

Rahul Gandhi – Apart from this, you divide on one side and when you think about the future, you look back and look at history. I think what you are saying is that India needs a new vision. What do you think that should be. Surely you talked about infrastructure, education, health services. How will all this be different or different from the past 30 years? Which pillar will be different?

Raghuram Rajan – I think you have to develop capabilities first. For this, better education, better health services, better infrastructure is necessary. Remember, when we talk about these abilities, they should also be implemented.

But we also have to think about how our industrial and market systems are. Even today, we have the same system as the old License Raj. We have to think how to create such a system in which a lot of good jobs are created. There should be more freedom, more trust and confidence, but it is a good idea to confirm it.

Rahul Gandhi – I am surprised to see how important environment and trust are to the economy. What I see among the Corona catastrophe is that the issue of trust is the real problem. People do not understand what is going to happen next. There is a fear in the whole system. Talk about unemployment, there is a big problem, there is a large scale unemployment, which is going to be huge now. How do we proceed for unemployment, when we get rid of this crisis, how will we deal with unemployment in the next 2-3 months.

Raghuram Rajan – The figures are very worrying. If we look at the statistics of CMIE, it is known that due to corona crisis, about one crore more people will be unemployed. 5 crore people will get jobs, about 60 million people will be out of the labor market. You can raise questions on a survey, but we have these figures in front of us. And these figures are very broad. This should make us think that we should open the economy by measuring, but as fast as possible, it has to be done so fast that people start getting jobs. We do not have the ability to help all classes. We are a relatively poor country, people do not have much savings.

But I ask you a question. We have seen a lot of measures in America and Europe has taken such steps keeping in mind the ground reality. The Government of India has a completely different reality that it is facing. What do you think is the difference between dealing with the situation in the West and the ground reality of India.

Rahul Gandhi – First of all scale, the enormity of the problem and the financial system at its core is the problem. Inequality and the nature of inequality. Caste problem, because the system that Indian society is in is completely different from American society.

Rahul Gandhi – The thoughts that are pushing India back are deeply ingrained in society and hidden. In such a situation, I feel that India needs a lot of social change, and this problem is different in every state. The politics of Tamil Nadu, the culture there, the language there, the thinking of the people there is completely different from the UP ones. In such a situation, you will have to develop arrangements around it. The same formula will not work, cannot work for the whole of India.

Apart from this, our government is completely different from America, in our system of governance. There is a sense of control in our administration. We have more of a DM than a producer. We only think about control, people say that this is so since the British era. I do not believe so. I believe this is a system even before the British.

The way of governance in India has always been control and I think that is the biggest challenge before us today. We are unable to control corona disease, so as you said, it has to be stopped.

Another thing that bothers me is inequality. This has been the case in India for many decades. As inequality is in India, it will not be seen in America. So whenever I think, I think how to reduce inequality because when a system reaches its high point then it stops working. You will remember Gandhiji’s sentence that go to the end of the queue and see what is happening there. This is a big lesson for a leader, it is not used, but I think a lot of things will come out of here.

In your eyes how to deal with inequality. It is also seen in the corona crisis. That is, the way India is treating the poor, how are we adopting the attitude with our people. There are two different views about migrant versus thriving. There are two different India. How do you combine these two together.

Raghuram Rajan – See you know the bottom of the pyramid. We know some ways to improve the lives of the poor, but we have to think carefully so that we can reach everyone. I believe that many governments have worked for food, health, education and better jobs. But about the challenges, I think administrative challenges are there to reach all. But in my view the big challenge is from lower middle class to middle class. Their needs are jobs, good jobs so that people do not depend on government jobs.

I believe that there is a need to work on this front and in view of this it is necessary to expand the economy. We have seen our economic growth falling over the last few years, despite the fact that we have an army of young workers.

So I would say not just go to the possibilities, but create opportunities that flourish. Even if there have been some mistakes in the past years, this is the way to move forward. Think of the way in which we have progressed successfully, moving into software and outsourcing services. Who could have thought that all this would become India’s strength. But all this has come to the fore, and some people argue that it came out because the government did not pay attention to it. I do not believe so. But we should consider any possibility, give opportunity to the entrepreneurship of the people.

Rahul Gandhi – Thank you, Thank you Dr. Rajan

Raghuram Rajan – Thank you very much, nice to talk to you.

Rahul Gandhi – Are you safe?

Raghuram Rajan – I am safe, Goodluck

Rahul Gandhi – Thank you, bye


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