India faces economic catastrophe.

• Questioning the style of function in the National Democratic Alliance (NDA) regime with the Prime Minister’s Office (PMO) dominating the decision-making process, former Reserve Bank of India Governor Raghuram Rajan said the Indian economy would be a shadow of its former self if the government didn’t announce further measures.
• Former Reserve Bank of India governor Raghuram Rajan questioned state governments that sought to suspend labour laws without wider consultations and micro-management by the Centre to force states to undertake the reforms. He advised the government to not bow under the pressure of rating agencies.
• He said payment of dues to the micro, small and medium enterprises (MSMEs) would be a better response to the sector’s woes.
• The former RBI governor said while the US-style bailouts were not possible in India, airlines were nonetheless bleeding and the government must offer them debt relief.
• Rajan said the financial sector has been in deep distress for a long time before the crisis struck. It needs re-structuring, re-capitalisation and the hole in the leaking bucket must be plugged, he said. Rajan explicitly called for better management of public sector banks.
• Rajan added that the proposed agricultural reforms could be watered down by bureaucrats.