GDP growth may slip into negative in Q1 says former RBI Governor C 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.

April 15, 2020 / 06:05 PM IST

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 percent.

"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.


COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

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).

Also read: In Charts | Economic impact of lockdown on Centre and states

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," Rangarajan told PTI.

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 percent. But I think probably it will be closer to 3.5 percent 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.

Follow our full coverage of the coronavirus pandemic here.
first published: Apr 15, 2020 05:55 pm

stay updated

Get Daily News on your Browser
ISO 27001 - BSI Assurance Mark