COVID-19 Could Sink India Deeper Into Poverty, Warns Raghuram Rajan

by Rahul Gautam 4 years ago Views 3681

As the coronavirus and global lockdown have eclipsed the world economy, former RBI Governor, Raghuram Rajan, has expressed apprehensions that India could take a hit of nearly $1 Trillion and 20 crore people could sink into poverty

Addressing a webinar organised by the International Monetary Fund, the former RBI governor also opined that once the pandemic settles down, an emotional and economic backlash against China is expected. Therefore, India must try to become the contract manufacturer of the world, making use of this opportunity.

Underlining the fact that western economies are more battered than the Indian economy owing to COVID-19, Rajan said India must woo capital and investors to its home turf as China might not be the most sought destination now. However, he added that this scenario could change depending on the spread of the disease in India.

'The government should be buying as much oil as possible, as such prices may never be seen in the future of oil,' Rajan also commented regarding crashing crude oil prices to an all time low.

Throwing light on future economic scenarios, he said that from now onwards,

health and safety will become the No.1 priority on Individual's agenda and that there will be a boom in the digital economy like home entertainment, home education and home fitness.

“The ticket size of spending will drop for a while. People will spend on cheaper goods than on expensive goods, or delay spending for a while,' he added.

The world acclaimed economist also said that gold as an asset could see appreciation and jewellery, as a discretionary spend, will take a hit.

He added that like tourism and cinema, the Indian wedding industry will take a hit, as social distancing, cost consciousness, travel avoidance, etc., will prevent extravagant weddings, destination weddings, etc. This will also hit all connected industries.

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