India needs new economic strategy to come out of COVID crisis: Raghuram Rajan

India will need a new covenant to come out of the COVID-induced economic crisis and regain growth levels that the nation saw during the first few years of the millenium. "India in the old way simply doesn't cut it," Rajan told in an interview to ET Now. He spoke of a staggered restarting of the economy with the aim of both saving lives and preserving livelihood.

Rajan, who has already expressed his willingness to work with the Indian government if approached for assistance to deal with the economic fallout of the coronavirus lockdown, said the post-Covid period cannot be spend with the same kind of financial fragility and fiscal tensions with which we entered the crisis. This, he emphasised, will need significant reforms and how to build a political consensus around those reforms will be the central question.

The former RBI governor added that lack of new reforms would result in India "crawling along" in an ineffective way and this is one thing that the country can't afford given its large young population.

"India can't remain locked down forever," Rajan said, emphasising on the need for a staggered approach towards easing of restrictions. 

A fortnight ago, Rajan was among the 12 members named by IMF managing director Kristalina Georgieva to her external advisory group to provide perspectives from around the globe on key developments and policy issues, including responses to the exceptional challenges the world now faces due to the coronavirus pandemic. Soon after, he predicted that the world is "almost surely" heading towards a deep recession.