Spend Rs 65,000 crore for the poor, says Rajan, as India prepares to lift curbs

Spend Rs 65,000 crore for the poor, says Rajan, as India prepares to lift curbs

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Today, with the most stringent lockdown in the world, India has recorded over 35,000 positive Covid-19 cases and more than 1,000 deaths. 

Although the country’s Covid-19 trajectory has tapered over the last couple of weeks, it continues to be steeper compared to Asian peers such as Japan and Indonesia.

The top five states – Maharashtra, Gujarat, Delhi, MP, and UP – together account for 71 per cent of active coronavirus cases in the country.

But, the Indian economy cannot be shut down for so long.

Setting the stage for a revival in economic activity that came to a halt in March, India is preparing for graded lifting of the extended nationwide lockdown from May 4. 

The government is also set to announce a new partial lockdown strategy. 

Districts with no active coronavirus cases will have fewer curbs on daily lives of people and operations of business than other districts with positive cases. Hotspots are likely to remain under a complete lockdown.

Underscoring that Rs 65,000 crore should be spent to support the poor amid the Covid-19 pandemic, former RBI Governor Raghuram Rajan said that India should be cleverer in lifting the lockdown and needs to open up its economy in a “measured way” soon to save jobs, 

He added that it is all too easy to have a lockdown forever, but obviously that is unsustainable for the economy.

In order to power up India’s economic engines at the end of the 40-day lockdown, Prime Minister Narendra Modi on Thursday urged his top ministers to accelerate reform measures and remove hurdles in a time-bound manner to boost investment and fuel growth.

According to a statement from the Prime Minister’s Office, a high-level meeting chaired by Modi discussed strategies to attract more foreign investments and encourage local investments to revive the economy ravaged by the pandemic.

The statement added that discussions also focussed on guiding states to evolve strategies and be more proactive in attracting investments

The meeting came a day after a task force headed by economic affairs secretary Atanu Chakraborty estimated an investment need of ₹111 trillion over the next five years to build infrastructure projects and boost economic growth. 

Global rating agency Fitch Ratings on Thursday downgraded the viability ratings (VR) of State Bank of India (SBI), ICICI Bank and Axis Bank to ‘bb’ from ‘bb+’ following the coronavirus pandemic and measures to contain its spread. The agency also slashed Bank of Baroda’s (BOB) VR to ‘bb-‘, from ‘bb’.

Meanwhile, Reliance Industries (RIL) which generated a consolidated net profit of Rs 39,880 crore in 2019-20, may save about Rs 600 crore annually through the 10 per cent pay cut announced for employees in the hydrocarbon business. However, the salary cut is not across the board. Staff earning more than Rs 15 lakh annually will face a 10 per cent pay cut, while the cuts will be 30-50 per cent for senior executives and board members. RIL Chairman Mukesh Ambani has cut his Rs 15 crore annual salary to nil.

Experts opine that the savings of RIL through a 10 per cent pay cut is quite irrelevant as it may come around Rs 600 crore annually, which translates into a monthly savings of Rs 50 crore. This has left most analysts wondering about the rationale of the salary cut. RIL, which generated a revenue of Rs 6.6 lakh crore in 2019-20, reported market value of Rs 9.3 lakh crore as on Thursday.