"The reality right now is not to say open the flood gates and spend on anything. The reality is we need to spend on those firms which will benefit the economy going forward. So, we need to spend on profitable firms which are now in danger ... because they haven't produced revenues for 4 months, but have been incurring costs along the way.
Stating that repair is important to recover from the impact of pandemic, Rajan said if a firm is unable to function, that's a loss to GDP going forward. "If it can benefit from additional funding, writing down of debt it may contribute significantly more than the normal Keynesian stimulus," he added.
To contain the spread of Covid-19 pandemic, the government had imposed the lockdown
from March 25. The gradual opening up of economy started since June. In May, the government had already announced a nearly Rs 21 lakh crore package to support the economy.
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