India needs an immediate fiscal stimulus of around 5% of gross domestic product (GDP) and the needs will increase the longer the government waits to announce such a measure, said Rakesh Mohan, who for the most part of his career has been in the policy hot seat, first as an economic adviser during the 1991 balance-of-payment crisis, which triggered a big burst of reforms, and later as a central bank deputy governor.
Mohan, who is now a senior fellow at the Jackson Institute for Global Affairs at Yale University, said in an interview that India has the capacity to sustain high temporary fiscal deficits and then recover by restoring relatively healthy economic growth.