Raghuram Rajan: Should economies pile up debt to cope with Covid-19?
The Interview
BBC
4.3 • 537 Ratings
🗓️ 29 May 2020
⏱️ 25 minutes
🧾️ Download transcript
Summary
The Covid-19 pandemic has plunged the world economy into a deep recession. How long will it last and what kind of recovery can we expect? That in part depends on what governments do now. Should they be piling up future debt to cope with today’s crisis? Stephen Sackur speaks to the former Governor of India’s Reserve Bank and IMF chief economist Raghuram Rajan. Do the old rules of fiscal discipline no longer apply?
(Photo: Raghuram Rajan, IMF chief economist)
Transcript
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| 0:00.0 | You're listening to a podcast from the BBC World Service. This is Hard Talk with me, Stephen Sacker. |
| 0:06.7 | Thanks for downloading this edition of the program. I do hope you enjoy it. |
| 0:11.3 | Welcome to Hard Talk on the BBC World Service with me, Stephen Saker. My guest today is an |
| 0:17.1 | internationally respected economist who was a key player in India's economic rise of the last two |
| 0:23.8 | decades, serving as government advisor and governor of the National Reserve Bank, that following a stint |
| 0:31.3 | as chief economist at the IMF in Washington. Raghu Rajan was always known as a fiscal disciplinarian. It made him unpopular in some |
| 0:40.9 | quarters in his home country. Now his long-term aversion to debt-fueled growth faces a new challenge. |
| 0:49.3 | The calamitous impact of COVID-19 on the global economy and the desperate need for governments around the world |
| 0:57.1 | to mitigate the damaging impact on jobs, trade and business confidence. |
| 1:02.7 | From Washington, D.C. to Delhi, the response has been to pump massive emergency funds into |
| 1:08.8 | the economy, building a debt mountain for tomorrow to alleviate the |
| 1:14.0 | pain of today. Will it work? Will COVID-19 hasten fundamental shifts in the world economy? Well, |
| 1:22.8 | Raghu Rajan joins me now from Chicago. Welcome to Hard Talk. Thank you. Let's begin with a simple proposition |
| 1:30.3 | that the COVID-19 pandemic has been very damaging to the world economy. The question is, |
| 1:37.7 | just how bad is it going to get? What's your answer? Well, it depends on this very big imponderable. How |
| 1:45.8 | successful are we to be in arresting the spread of the pandemic? We've dealt with the first |
| 1:52.7 | phase in industrial countries. We've brought the reproduction rate down below one, |
| 1:58.1 | and these countries are opening up. Is there a second phase? And of course, |
| 2:02.3 | it's still rampant in the emerging markets, Brazil, Russia, India. And of course, in Africa, |
| 2:09.3 | it's starting to grow in a number of places. So I think we still have to wait and see how bad |
| 2:15.0 | it can get. It's already very, very bad. |
| 2:23.9 | You recently wrote, I'm in the camp which has grown progressively more and more pessimistic about the outlook. Is that because of your focus on some of the emerging markets or because |
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