The economy cannot get back on track unless the lockdown is lifted and restrictions are removed, C. Rangarajan, former RBI Governor and former Chairman of the Economic Advisory Council to the Prime Minister, said.
“It won’t be proper to expect a recovery in economic growth without lifting the restrictions. It can’t happen. Much of the recovery would depend on what view we are going to take about the lockdown,” he said during an interaction with Southern India Chamber of Commerce and Industry’s (SICCI) president Ar. Rm. Arun as part of the industry body’s 360 initiative that involves monthly discussions with distinguished guests.
Mr. Rangarajan pointed out that the government may be told to spend more and the banking system may be asked to provide more credit but this might not result in an increase in production until everybody is able to move, goods start moving and migrant labourers return from home States.
The decision to completely lift restrictions would be difficult given the fears of a second wave of COVID-19, he said, citing the recent concerns expressed over the opening of schools and colleges.
‘Adequate measures’
Rather than imposing another lockdown, Mr. Rangarajan said the second wave could be tackled by taking other adequate measures.
Higher growth rate can be the only answer to address socio-economic issues, he added. “Without a higher level of growth, it would be difficult to achieve the socio- economic goals of reducing poverty and inequality,” Mr. Rangarajan said.
Apart from increasing healthcare expenditure and expenditure to take care of the vulnerable sections in society, the government should also increase capital expenditure that goes into infrastructure-building. This would lead to a pick up in economic activity, and create jobs.
Slight pick up
Mr. Rangarajan said there would be a slight pick up in economic growth in the second half of 2020-21 (September-March) but that would not be adequate to make good the loss suffered during the first half.
Economic growth can get back to pre-pandemic levels by 2021-22, provided the second wave of COVID-19 is tackled, he added.
Thereafter, Mr. Rangarajan said, economic growth would be stronger but a lot would depend on, among other factors, what actions the government takes and whether private investments come in.
