BCCL
Given the impact of the coronavirus pandemic on India’s GDP, Raghuram Rajan believes that a stimulus will be needed — especially in sectors like construction, which can create multiple jobs and increase the demand in other associated sectors like cement and steel.
Here, he says, that the centre should help the state governments with finances for them to spend more on infrastructure development.
Reforms can also be a type of stimulus. Like the announcement of Atmanirbhar Bharat, just a timeline or the indication of upcoming reforms can boost investor sentiment, according to Rajan.
“The world will recover earlier than India, so exports can be a way for India to grow,” he said. However, in order to take advantage of that, Rajan believes that India needs to undo its recent tariffs increase so that inputs can again be imported at a low cost. This will boost the margins for companies using those inputs and shipping out value-added products.