Coronavirus: Raghuram Rajan said the world is in a deep recession due to COVID-19

Highlights Willing to help if assistance needed, Former RBI governor Raghuram Rajan

All businesses except essential services temporarily shut down in India

Government allowed banks to defer EMIs by three months

Former Reserve Bank of India (RBI) governor Raghuram Rajan has indicated he is willing to help the country if his assistance is sought to deal with the economic stress linked to the COVID-19 pandemic. With the country under a lockdown to contain the pandemic, several sectors that are already under stress such as banking and aviation are facing a severe strain.

All businesses except those in essential services have temporarily shut down.

"The answer is a straightforward yes," Mr Rajan, who is teaching in the US, told NDTV on whether he would return to India if asked for his assistance on economic matters during the pandemic.

"If the virus spreads, as it has spread in Italy and the United States, we have to take it very seriously. What you see in these countries is a tremendous effect on public health, the overburdening of many hospitals and many deaths and of course, when that is happening economic activity is hard to carry on," Mr Rajan said.

The former RBI governor said the world is "almost surely in a deep recession". "Hopefully, we will see a rebound next year, and it depends on measures we take to prevent a recurrence (of the pandemic)," he told NDTV.

The government has allowed banks to defer EMIs by three months. The aviation and related sectors such as tourism have seen massive pay cuts and even layoffs after all flights were stopped and people cancelled their bookings.

Prime Minister Narendra Modi is likely to address the nation tomorrow to announce whether the lockdown would be extended.

"The first sign of difficulties in India is often seem in foreign exchange. So far compared to other emerging markets our exchange rate has stayed quite stable, presumably from some support of the Reserve Bank of India. I should say we have depreciated some against the dollar, but you know countries like Brazil have gone down 25 per cent. We haven't been in that situation," he said.

Mr Rajan, whose policy thinking differs from that of the government led by PM Modi - the former RBI chief is a big critic of demonetisation - left the central bank after just one term amid heavy criticism from segments of the government for offering opinions on matters unrelated to monetary policy.

In October last year, Mr Rajan said only "internal cohesion and economic growth" and not "majoritarianism" will help strengthen India's national security.

"In the long run, it seems to me that internal cohesion and economic growth rather than divisive, populist majoritarianism will be India's root to national security. So all this sort of majoritarianism may certainly for a while win elections, but it is taking India down a dark and uncertain path," Mr Rajan said at the OP Jindal lecture at Watson Institute, Brown University, on October 9.