Further lockdowns after reopening will be devastating for economy: Raghuram Rajan

Former RBI Governor Raghuram Rajan has said that further lockdowns after reopening could be “devastating” for the economy and will diminish the government’s credibility. “I don’t think we have to aim for 100% success…What we have to do is manage the reopening so when there are cases we isolate them,” Rajan said in a conversation with Congress leader Rahul Gandhi.

Rajan said managing the reopening is important so that if there are fresh cases, they can be isolated quickly.

“So a lot of work needs to be done both on creating the structures, as well as ensuring that the workplace is relatively safe, as well as ensuring that if there are accidents, if there are fresh cases, how do we isolate quickly without having to go to a second or a third lockdown? Those will be devastating if we have to go there,” he said.

If you are forced to shut down again after reopening then it does diminish credibility, he said, stressing that further lockdowns will indicate reopening has not been managed successfully.

In the chat, Rajan, who is now the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago’s Booth School, said ensuring workplaces are safe and how to transport people are all aspects that need to be thought off. He stressed the need for a tremendous expansion in the economy to create good jobs.

Citing unemployment data from the Centre for Monitoring Indian Economy (CMIE), Rajan said 100 million people are being put out of work either through unemployment or exit from the labour force.