New Delhi: Former Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the government should take advantage of the peaks in Indian equity markets right now and should be busy selling stakes in public sector undertakings (PSUs). The proceeds of the sale can be used for more infrastructure development that would help pull the economy from its current dismal state, added Rajan. In an interview to ET Now, Rajan said, "You just started this programme saying the Sensex was hitting 50,000, where are the share sales? You should be selling shares from every rooftop."
"If I could, I would have had these on tap to sell… the greater sort of source of reducing the deficit may be in selling assets. And one of the things that the government promises every time and defaults on is, selling government companies," said Rajan in the interview. He added that the funds from such sales should be used to finance infrastructure development and to transfer more funds to the states so that they are able to undertake capital expenditure. "Getting the money out to the states is quite important. This is the wrong time to starve states," said the former RBI Governor.
Commenting on what Union Budget 2020-21 should prioritise, Rajan said that the government should focus on increasing its spending and the Finance Ministry should start with providing relief to the poor, small and medium firms and more infrastructure spending. "Focus on what is essential. And I would start with relief to the poorer households, and, you know, ensure that there is adequate relief to small and medium enterprises, but then move on to how do you get the economy back on track," Rajan said.
He added that in addition, the government should ensure that it has paid all its bills so that the liquidity goes back to companies that can use the funds for investment. In a veiled reference to the controversial farm reforms that have led to protests, Rajan said, "Clearly, reforms are important, but we have to do them in a way that doesn't prompt reaction, which means much more though going into them, much more consultation, much less of a 'my way or the highway.'"
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