India’s challenge is to avoid a third lockdown, Raghuram Rajan tells Rahul Gandhi

The immediate challenge for India is to lift the lockdown but ensure that fresh cases do not lead to a third lockdown, which will have an even more devastating impact on the economy, the former RBI Governor tells Rahul Gandhi in a conversation.

Here are the key takeaways from what he said:

1. Keeping the people well and alive over the next four months should be the top priority. Break the norms, if necessary.

2. Feeding the people and keeping them from coming out on streets in search of work should cost around 65 thousand Crore Rupees, which in an economy of the size of India (200 lakh Crore) is doable.

3. In the United States experts are calling for scaling up COVID-19 testing to half a million per day. Since India cannot wait to scale up and has less resources, we need to be cleverer and do mass testing of a thousand samples in particular areas.

4. After the lockdown is lifted, not only will the workplaces have to be kept safe but also commuting to the workplace needs to be made safe. The challenge is how to ensure physical distance in public transport.

5. India cannot afford to be a divided house. Stating that social harmony is a public good, Dr Rajan said that he has been re-learning lessons from the Indian Constitution and early administrations. They had realized that some issues were best shelved to ensure people do not keep fighting over them.

6. Dr Rajan dismissed suggestions that India could take advtantage of the pandemic, that it will be in an advantageous position after the dust settles. The pandemic is unlikely to end positively for any country, he felt. There will have to be a rethinking on everything in the gloal economy and India could shape the dialogue, he felt.

7. He agreed with Rahul Gandhi, who pointed out that southern states in India were doing a better job because they are decentralized while northern states are busy centralizing power. Centralisation across the world has disempowered people, said Dr Rajan, because markets like uniformity.

8. The Global economic order has not worked for a large number of people and growing inequality has emerged as a major concern. Another major worry is the rise of the ‘Precatariat’, of people in precarious employment, like gig workers who are not sure how long they can work.

9. Dr Rajan agreed that ‘control’ is at the heart of the Indian administrative system and pointed out how states are given funds but only condition that they follow certain rules. Even elected state governments are not given their share of the funds with no questions asked.

10. India, says Dr Rajan, needs a new vision and the task is to create capabilities and build better education, better healthcare and better infrastructure. Many more new jobs of a good quality will have to be created and remnants of the old license permit raj abandoned.