Bold reform that triggers animal spirits needed for Indian economy: Rajan

TIL Desk/Business/New Delhi/ Bold government reform that triggers “animal spirits” and implemented effectively is essential for India to come out of the Covid-19 setbacks, former RBI Governor Raghuram Rajan said on Thursday.

He also made it clear that the space for expanding the balance sheet for RBI is not “infinite”, and the central bank will need to have a strong focus on monitoring inflation as it does that.

Rajan said that because of the slide in the growth over the last few years, India entered the current crisis in a more “debilitated” state as compared to its peers.

As per some estimates, economic growth is expected to contract by as much as 9.5 per cent in FY21 due to the coronavirus pandemic. The government and RBI have announced a slew of reforms to arrest the slide and aid the recovery.

” kind of animal spirit has to be created by really bold government action. And unfortunately thus far, I can see some possibilities that have been announced in agriculture but we need far more elsewhere,” Rajan said