Former RBI Governor Dr Raghuraman Rajan, now Professor of Finance at Chicago Booth, US has indicated the upcoming economic depression due to the ongoing COVID pandemic as the greatest emergency for independent India.

He has recommended that the government, post lockdown focus primarily on ensuring survival of the poor and the non salaried lower middle class in the short to medium term - at least till the economic cycle revives.

"The state and Center have to come together to figure out quickly some combination of public and NGO provision (of food, healthcare, and sometimes shelter), private participation (voluntary moratoria on debt payments and a community-enforced ban on evictions during the next few months), and direct benefit transfers that will allow needy households to see through the next few months," - Raghuraman Rajan

Rajan suggested that the government should look at curtailing and delaying unnecessary and less important expeditures and give prioriy to funding the sustenance of the poor.  His suggestion in his blog on LinkedIn said that if the government looks at driving everything from the Prime Ministers office with the same set of people, it willl be doing "too little, too late".

"The state and Center have to come together to figure out quickly some combination of public and NGO provision (of food, healthcare, and sometimes shelter), private participation (voluntary moratoria on debt payments and a community-enforced ban on evictions during the next few months), and direct benefit transfers that will allow needy households to see through the next few months." - Raghuraman Rajan

Despite lack of resources, the government needs to do everything possible to support the humane character of the nation. Unlike Europe or the US, which have a 10% buffer spend on their GDP before they enter a rating downgrade, India has entered this crisis with a huge fiscal deficit, with expenses still mounting and the revenue stream looking bleak for the year.

"It is said that India reforms only in crisis. Hopefully, this otherwise unmitigated tragedy will help us see how weakened we have become as a society, and will focus our politics on the critical economic and healthcare reforms we sorely need." - Raghuraman Rajan

He added that we have already seen the consequences of movement of migrant workers. Another will be people defying the lockdown to get to work.  When the lockdown ends, there will be a rush to join work, whatever the risk.  As the risk of loss of livelihood for a family is higher than that of death.

In his suggestions to the Reserve Bank of India, Rajan said that though the regulator has pumped liquidity into the banking system, it needs now to go beyond - for e.g. lends against hig collateral to well managed NBFCs and imposing a moratorium on financial institutions dividend payment, in order to build capital reserves.