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    PANORAMA
    Measures suggested by Raghuram Rajan to save the economy

    PANORAMA

    Measures suggested by Raghuram Rajan to save the economy

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    Former Reserve Bank of India (RBI) Governor Raghuram Rajan has said the government will have to expand its resources in every way possible, spending as cleverly as possible to bring the economy back to pre-pandemic GDP levels.Rajan, in his LinkedIn post stated that the Centre has "to take every action that can move the economy forward without additional spending."He further added that the government's strategy to conserve resources today for a possible future stimulus is "self-defeating".Here are a few measures former RBI governor suggested which could help salvage the slowing economy.

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    Replenish MNREGAReplenish MGNREGA, which is a  tried and tested means of providing rural relief and should be replenished as needed.

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    Direct cash transfers to poor
    Given the length of the pandemic, provide more direct cash transfers to the poorest households, especially in urban areas.

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    Timely clearance of  payables
    Government and public sector firms must quickly clear payables so that liquidity moves to corporations.

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    Rebates on corporate income tax and GST
    Rebates could be given on corporate income tax and GST paid by small firms last year.

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    Recapitalisation of public sector banks
    Resources should be set aside to recapitalise public sector banks.

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    Aid from cash-rich platforms
    Private sector should also be urged to give a helping hand. The government should urge cash-rich platforms like Amazon, Reliance, and Walmart to reduce receivables and pay small suppliers on time.

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    With the RBI provided loan moratorium now over, Rajan suggested the Centre should devise a well thought out plan to address the coming financial distress. He proposed:-1. A variety of structures should be in place to help debtors and claimants reach agreements to restructure obligations.2. A number of arbitration forums should be set up to renegotiate claims of various sizes.3. Civil courts, debt recovery tribunals, and the NCLTs should be beefed up to provide rapid back-up judgments.

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