Growth May Slip into Negative in First Quarter: Ex-RBI Guv C Rangarajan on Covid-19 Lockdown

Predicting that the growth rate in the first quarter of the current fiscal may slip into negative, former RBI governor C Rangarajan on Wednesday

expressed the view that Prime Minister Narendra Modi's lockdown extension announcement should have included plans to address the issues of migrant labourers and daily wagers.

Rangarajan said though there may be negative growth in the GDP during the first quarter, if the situation recovers during the next three quarters, the growth rate may be closer to 3.5 per cent.

"The most important thing is that the hardship of the lockdown is being borne very severely by the vulnerable sections." Because of the closure of the factories, the daily wage earner, including the migrant labourer, has been severely affected, he said.

"Therefore if lockdown is absolutely essential, then I think something must be done to take care of these people who have been thrown out of employment. And therefore this announcement should have been accompanied by an announcement regarding what and how they will take care of these people... Immediately in his (Modi) speech or elsewhere we should have seen (measures for labourers and daily wage earners).

"Even today in the relaxation norms, along with it perhaps some announcements on how the migrant labourer and others will be helped.It is also necessary," said Rangarajan.

The former RBI Governor said the government has gone by medical advice to impose a lockdown and by the same advice they expanded the lockdown also which is essential to combat the coronavirus spread. The lockdown has brought the economic activity to "halt", he said.

"Perhaps in the first quarter of the year, the GDP growth may even be negative.But that could be made up by the growth in the next three quarters. Some people have estimated the growth rate to be about 2 per cent. But I think probably it will be closer to 3.5 per cent for the year as a whole.

But that all depends on how long this virus will continue, he said when asked about the lockdown impact on the economic growth.