India’s economy is in stress because of the COVID-19 pandemic. Countries like America, China have found their ways to recover economies in their ways. This situation is very difficult for India as many of the reserves of government are already spent on the COVID-19 pandemic. Many of the government experts believe that there is no another way rather than to print more currency and issue some bonds. Our Former Reserve Bank of India (Ex-RBI Governer) Dr. Raghuram Rajan, has shared his views regarding what should India do to revive the Indian economy.
He shares his views on the social platform LinkedIn. He suggests that the government has to issue some more government bonds with the interest rate of 6%.
These are some measures which are suggested, (Ex-RBI Governer), Dr. Raghuram Rajan :
- The government can issue bonds having worth of Rs 1 lakh crore, which RBI can directly buy them from the government. By doing this RBI can deposit the money in the government s’ account. This will help the government in a good way.
- When the government is spending the money which is funded by RBI. The Central bank can charge the amount on the commercial banks at the reverse repo-rate of 3.75 %.
- Nowadays RBI s’ assets will be grown if it owns government bonds of 1 lakh crores the and its liabilities are relative to that.
- When the government has 1 lakh crores fund they can spend it on salaries, boosting the demands and on the projects.
- In a normal situation, banks use their extra reserves to give loans to the business. But in this pandemic, there is no demand for the credit. So the commercial banks can redeposit the money with RBI at a reverse repo rate of 3.75%.
He also stated that the government should be more protective to shield the Indian economy. The government should spend on what is necessary.