more than 100,000 people have now died from coronavirus in the united states. that's according to officialfigures. the real number will be much more. 100,000 is more than the combined total of deaths from the korean, vietnam and iraq conflicts. large protests and looting have taken place in minneapolis after the latest death of an unarmed black man in police custody. george floyd was arrested and pinned down in the street, an officer kneeling on his neck. president trump says he's asked the fbi and department ofjustice to investigate the incident. and the first private sector mission to the international space station and the first crewed launch from us soil in nine years has been postponed due to bad weather. it's now thought that the spacex rocket will be launched on saturday. now on bbc news, hardtalk.

welcome to hardtalk. i am stephen sackur. the covid—19 pandemic has plunge the world economy into a deep recession. how long will it last and what kind of recovery can we expect? well, in large part it depends on what governments do next. all they pile upa what governments do next. all they pile up a mountain of future debt in order to cope with today's crisis? my order to cope with today's crisis? my guest is the former governor of india's reserve bank, raghuram rajan. do the old rules of fiscal discipline no longer apply!

raghuram rajan, in chicago, welcome to hardtalk. thank you. let's begin with a simple proposition that the covid—19 pandemic has been very damaging to the world economy. the question is, just how bad is it going to get? what is your answer? it depends on these big question on how successful a re it depends on these big question on how successful are we to be in arresting the spread of the pandemic. we have dealt with the first phase in industrial countries. we have brought it down, we have brought the reproduction rate down below one and these countries opening up, is there a second phase? of course, it is still rampant in the emerging markets, brazil, russia, india and of course in africa it is starting to grow in a number of places, so, ice think we still have to wait and see how bad it will get. it is already very, very bad. you recently wrote "i'm in

the camp which has grown progressively more and more pessimistic about the outlook." is that because of your focus on the emerging markets all because of what you may see as mismanagement of the problem in some of the developed, richer countries? i think it is a bit of everything, right? what we have seen in industrial countries is different countries who have different countries who have different degrees of success. that is also true of emerging markets. vietnam is struggling to prevent its first death from the virus went on the other hand brazil has had tens of thousands of deaths already and it is just expanding. so of thousands of deaths already and it isjust expanding. so management has been variable but we also do not really know how bad it can get, whether we will have a second way. we have spent an enormous amount of money already on cushioning the effects of the first wave. there is not a lot left in the kitty for the second wave, if it actually comes. what president trump wants to see is

a shaped recovery, that is, a steep plunge down at the beginning the crisis, followed by a rapid accent back to some sort of economic normality as people and the lead has been put on the spread of the pandemic. do you believe in this concept of a v shaped recovery? pandemic. do you believe in this concept of a v shaped recovery7m is possible to get a rapid recovery in some areas, for example, manufacturing, if you can get the supply chain is working and if demand starts picking up. these are all big gifts. 0n the other hand, he will venture into a restaurant, even in china with all the tracking they are doing, you still see that many restau ra nts are doing, you still see that many restaurants are half or three quarters empty still. people are not confident enough to go into places that are very crowded. so my sense is that any recovery is going to ta ke is that any recovery is going to take place over time, especially in the high contact service sectors

such as hospitality, travel, et cetera but even in manufacturing, getting the supply chain synchronised and making sure your supplier in mexico also has his plant running and that your buyer in europe is willing to accept delivery. this is also going to take time. so, ithink delivery. this is also going to take time. so, i think this the shape is looking a lot more optimistic, even if we do not have fresh outbreaks of the virus. what is interesting about your analysis there is that it is not just about controlling your analysis there is that it is notjust about controlling and curbing the spread of the virus but it is also about addressing public perception, confidence, attitude because as you point out, in many sectors, important sectors of the us and wider global economy, such as aviation and those sectors that rely on public confidence in being in open spaces with other people, whether it be entertainment, restau ra nts, whether it be entertainment, restaurants, leisure activities, there is now a profound confidence

problem, isn't there? there is, right? in some sense the only answer to this is either knowledge that everybody has been vaccinated or that everybody has been tested recently i don't actually carry the virus otherwise will always be worried. there is somebody coming in here who is a carrier and what will that do to make? let's get into the detail of economic policy—making across the world and tap into your experiences both a former governor of the indian reserve bank and also chief economist at the imf. you have a lot of experience to bring to the table, particularly with the nature of fiscal policy and the use of debt. what within the united states and many other countries is vast, expansion of borrowing, of debt, to finance economic recovery packages, to help people in the here and now. you, traditionally, have been very cautious about the use of debt to

fuel economic recovery and growth. are you just as cautious today? well, i think the immediate reaction when the virus hit was appropriate. the sense was this would be only a couple of months. that the policy objective was to put the economy in a coma, protect people, protect their jobs, a coma, protect people, protect theirjobs, protect firms, and two months later, with the swish of the wind, the economy would wake up and we would be back to normal. that was the v shape recovery, the sense that this was all easily tackled. now, as we say, it would take much longer and there is a real question about whether the economy should be transformed in the process, whether it is enough to put to sleep or whether we need a new economy to ta ke whether we need a new economy to take of all the concerns about proximity as well as the ability to now work at a distance that far more

people realise they have. so, there will be transformations. haavi keeping the economy transforming? we are also discovering it is extremely costly to keep people at home, extremely costly to keep the lockdowns. the us has issued $3 trillion worth of debt this quarter and a trillion here and a trillion becomes money very quickly. the reality is now we have to make hard choices, pick and choose. what do we protect? clearly, people have to be protected but do we protect their jobs? perhaps they need newjobs elsewhere? we need to make sure that happens. we need to write credit at that time but do we have to keep a restau ra nt that time but do we have to keep a restaurant alive for the next year while it is closed? if i understand you correctly then, raghuram rajan, you correctly then, raghuram rajan, you seem to be saying that policymakers need to be a little bit more brutal, a little bit more cold—blooded and hard eyed about the current situation rather than p°ppin9 current situation rather than p°pping up, current situation rather than

popping up, as you put it, restau ra nts popping up, as you put it, restaurants or maybe even airlines, which you may believe do not have a long—term future in their current form. are you saying those businesses should be allowed to go past and not to allow them to go bust is economically, deeply an efficient and unsustainable? well, we certainly need to take start taking advantage of bankruptcy procedures and restructuring. some of these allies will have to shed plans, some of them will have to downsize somewhat given that air travel may be open streamed over the next few years. i think, now that we have steadied the economy a little bit, before the advent of new challenges, perhaps we should let the natural processes take over, market processes like bankruptcy and restructuring. some entities were obviously survive that they need much less debt then they have and piling on more debt is probably a bad option at this point. i think.... bad option at this point. i think. . .. isn't it bad option at this point. i think.... isn't it time

bad option at this point. i think. . .. isn't it time for some reassessment of your aversion to debt? let me quote you, you can rogoff, who has written a lot about the nature of the debt curve and how dangerous the national debt can be to economic growth, he says, "any sensible policy right now is going to have asked racking up the deficit for a long time. if we go up another $10 trillion, i would not even blink at that right now. "he is saying this is a very special, unprecedented situation and our responses need to be unprecedented as well below we have to be careful in two ways. one of those is i do think we will require much more money to be spent. but it may not be in propping entities up and making sure nothing changes. but it may be in ensuring there is a substantial stimulus so that the massive unemployment we have starts being

brought down relatively quickly, going forward. this may take the form for example of a massive infrastructure package in the us but what i am saying is we need to start shifting because we will need resources for that also down the line. of course, the post covid—19 world will require stronger worker protections, better healthcare, that will also require money. let's make sure we are not doing the wrong thing at this point, which is keeping unviable entities alive at enormous cost to our finances. that is one. i understand your point about the need for transformation but i want to get specific on the point of how much debt is too much debt? traditionally, economists like you have worried a great deal of nations take on debt that represents 100% of the national income, their gdp, but looking at italy, hurt badly by covid—19 and its economy frankly in ruins, it looks as though

their national debt in the next year or two will spiral beyond 160 or more % of gdp. are you saying that thatis more % of gdp. are you saying that that is simply unsustainable and italy is going to have to completely rethink its national economy? no, what has changed is the level of interest rates. they have come down a lot in higher levels of debt are affordable at these levels of interest rate. however, if you have an enormous amount of debt, it prevents you from doing some things, especially at times like this. take italy again, italy has not had the massive spending packages that germany has had precisely because it's germany has had precisely because its debt is so higher and it fears rolling the financial markets by taking ona rolling the financial markets by taking on a whole lot more debt. stimulus has been in single digits compared to the double digits that have been there in most modern european countries. that is one very, very important concern. the second concern is, you will have a

2—stage europe. you have sat in europe with debt to gdp in the 130, 100 and 40% of europe with debt to gdp in the 130, 100 and a0% of gdp, europe with debt to gdp in the 130, 100 and 40% of gdp, and in italy is case higher, and northern europe which is going along at 60— 70%. that is a 50 percentage point difference. that will create a lot of angst over the crisis which is why the reason why this common european budget that they are planning makes sense because these disparities alarming in a single currency. that is a fascinating take andi currency. that is a fascinating take and i want to push you further than on the world ‘s various, you know, reactions to the emergency, starting with europe. he seemed to be suggesting that unless europe gets serious about fiscal integration, a much deeper economic union, then, the eurozone as it is currently constituted, could collapse. is that what you are saying? because a divergence between northern europe and the south have become so start, they are not sustainable in the

current form? that is broadly what i'm trying to say. europe is really an idealistic project. northern europe has to ask whether it is idealistic enough about it to make some of the transfers that may be required, going forward. you cannot look at it purely in a sense of euros and sense, it has to be about the longer term goal and how we feel about it as europeans rather than individual nations. of course, a lot of stuff goes into that, how much sovereignty are you willing to give up, how much common rules do you want? different folks have different ta kes want? different folks have different takes on that but i would say that is an existential question right now. existential questions are europe, we have talked about donald trump and his determination as he would see it to make that a v shape recovery in the us but who do you see emerging from this covid—19 pandemic in the best economic shape?

the latest imf analysis suggests that while europe and the us will see steep contractions by the end of the year, maybe 6% of gdp contraction, china will check of about 1— contraction, china will check of about1— 1.5 —— contraction, china will check of about 1— 1.5 —— 2%. india was still be growing, only 1%. do you think this will hasten the shift in the balance of economic power in the world to the east, to china and to some extent, to india as well? i think these numbers will have to be revived. —— revised. india will not do as well, probably —3, four, maybe more. was ill and russia all experience significant rise in cases and worry about their economic performance. the reality is this is actually going to be as crushing a blow for the emerging markets with

the exception of a few like vietnam, south korea and china have managed to contain the pandemic. the problem for many emerging markets and developing countries, especially in africa, is that they are so dependent on a few commodities, on trade, or recovery, that even if they managed to contain the virus and prevent the extensive damage thatis and prevent the extensive damage that is likely given they have few resources to bail out firms and people, there is the problem of what happens after. how does the recovery ta ke happens after. how does the recovery take place? and don't have the resources for a substantial stimulus. so their stimulus depends on the industrial countries growing strongly and buying their stuff, and with all the constraints on trade with all the constraints on trade with or before the virus and now the massive fight that seems to be growing between the us and china, i really hope the world postcode comes together becomes because we really can't afford a trade war, especially ina number of can't afford a trade war, especially in a number of the poorest countries

in the world. it is interesting you say that, because all of the indications are that rising economic nationalism and protectionism is exactly what we are going to see, andi exactly what we are going to see, and i am very mindful that you wrote and i am very mindful that you wrote a book last year called the third pillar, looking at the relationship between capitalism and democracy. and you wrote, if people lose their faith in the ability to compete in the marketplace, if their communities continue to decline, if they feel the elite is appropriated all opportunity for itself, popular resentment can turn to rage. surely the covid—19 pandemic and the spiral of economic misery you've just outlined is going to, is it not, lead to that popular resentment leading to more rage? almost surely, yes. so what sort of hope is there? my yes. so what sort of hope is there? my hope is that we sort of see that this cannot go on. something which

is unsustainable has to stop. you can't have periodic crises, huge levels of inequality, massive spending, and then repeat every ten yea rs. we spending, and then repeat every ten years. we need to start tackling the problems that afflict capitalism and we need to start thinking how do we fix this inequality? which is problematic. and which is creating, according to some people, the wea kness according to some people, the weakness of demand that causes us to have these massive massively stimulating monetary policies that lead to the debt build—up and all the conservatives —— conservatism in me that you have talked about. we need to start thinking about the real economy, how do we make it fairer? you are a very well connected economist. point to me one global leader right now who is taking on that difficult task of talking genuine economic transformation for this being a moment of opportunity to rethink

capitalism. name me one. so i do think the us presidential election will offer some semblance of that choice, that is the democrats are certainly putting forward and alternative view. i think perhaps under bernie sanders and elizabeth warren, it was a little extreme, but ido warren, it was a little extreme, but i do think thatjoe biden has been moved a little more towards that camp. ido moved a little more towards that camp. i do think the debates that it will create, it will engender will be very important, because it talks about the sustainability of society going forward. in my mind, this us presidential election is one of the most, like every us presidential election, but this one in particular, about resetting the tone both of the dialogue within the united states, but perhaps across the world. sorry, i am trying to read tween the line. are you saying

for more years of donald trump would be disastrous not just for more years of donald trump would be disastrous notjust for the us economy, but the global economy? you can read between the lines. let me say again, i think this is an election which offers an important choice to the american people... let's talk about the country from which yourfamily let's talk about the country from which your family hails, let's talk about the country from which yourfamily hails, india. you we re which yourfamily hails, india. you were obviously, as i said, the governor of the reserve bank of india, very senior adviser to the government ‘s of mr modi and his predecessors. you fell out, i think it is fairto predecessors. you fell out, i think it is fair to say with mr modi and his party over economic policy—making, and some in his party said that you, in the end from proof that you were not a true indian because you did not take care of, for example, the small business people who wanted access to credit that you wouldn't give them. so the question is, mr modi, despite the fa ct question is, mr modi, despite the fact that infection rates are at the

moment rising in india, is extraordinarily popular and his brand of hindu nationalism appears more popular than ever. do you look at india and believe that mr modi has a sustainable project and programme for his country, or not?|j think if you look at india over the last few years, unfortunately economic growth has been declining. we have seen the budget deficits grow. we have seen a rise in bad debts in the system, partly as a result of the easy credit that said i was opposed to, and as a result, india enters this crisis in a somewhat even situation than other countries. it still has a substantial amount of foreign exchange reserves and it still is a big country with enormous resources, but they have to be used well. so far, if you look at the overall

infections, as well as the death rates, they are relatively small compared to the population. the worry is they are still growing after a substantial period of lockdown, and in fact, some of the management of this crisis whereby a number of migrants left the cities for their villages, may in fact have caused the virus to expand in those areas. india is in a difficult situation today. it does need to find the reforms that will enable it to grow, but it also needs to spend more money in stimulating the economy back to growth.|j more money in stimulating the economy back to growth. i think indians will be fascinated to hear you say the government needs to spend more money, but let's ask you one specific question to end about globalisation. here is a dramatic quote from the current world bank chief economist, carmen reinhart. i think covid—19 is the nail in the coffin of globalisation. you have referred your fears for an all—out

us—china trade war. is globalisation dead? it can't be dead, and that is the problem. we have a growing, an elderly population growing in industrial countries. demand is going to slow down. we have a young population in the emerging markets in africa is really, really very young. so if you look at the economic opportunities going forward , economic opportunities going forward, they are so big and fostering a genuine globalisation, which works for everyone. my argument has been the democratic backing for globalisation has been wanting in part because we haven't made sure the people left behind, especially in industrial country communities, but also in emerging markets, that they haven't had a fair shot. and that is why you see a growing resistance. and my belief is if we rethink this, and this goes back to new leadership to rethink this process and to put in place

policies that will lead to a better globalisation for all, both for the industrial countries and the developing and emerging markets. now, for that, i really think we really need to rethink our whole system. in a word, we must and now, but ina system. in a word, we must and now, but in a word, you are saying without new and ambitious and driven leadership in the world, we are in four years of misery and possibly worse. it is the commodity in short supply today, and we really need that. as you said, things can get much worse. but hopefully we can turn this world around. there are so many big global challenges, climate change for example, that we need to deal with. and for that we need global cooperation. but for that, you need leaders. notjust in the us, china, elsewhere who are willing to work together to create that new world. so i am hopeful that disaster brings rethinking, and rethinking

then creates the possibility of a better tomorrow. but that is hope —— hopeful me. we will stick with hopeful me. we will stick with hopeful you for now. raghuram rajan, it has been a pleasure having you on hardtalk. thank you forjoining us from chicago. thank you. hello again. wednesday brought us more sunshine across the country. the highest temperature was again around the greater london area, this time in heathrow, 26 degrees celsius. and a bit further north in suffolk, that's how we ended the day. now, over recent days, the warmth that has mainly been concentrated across south—east england has been spreading into wales, south—west england, and for thursday, the heat is more widespread

across the uk. so most areas will have warmer weather, one exception really — east anglia and south—east england where it is going to get a little bit fresher and temperatures coming down just a few degrees, but still warm. we'll take a look at why. 0n the satellite picture, we've got this area of cloud into northern scotland, bringing a bit of rain. and a very weak cold front diving southwards across the north sea — that is introducing fresher air to east anglia and south—east england and, ultimately, will knock the temperatures down by a few degrees. this is how the weather looks at the moment, though. it's cloudy for northern scotland, still got some rain around at the moment, but that will tend to ease over the coming hours. elsewhere, it's a largely dry picture, a little bit of low cloud, a lot of mist and fog patches towards coastal areas of lincolnshire. but otherwise, clear spells for most and a fresher feel to the weather across some of these eastern areas of scotland, eastern areas of england as that cooler airworks in. now, for thursday, most of us will have sunshine from dawn till dusk. any low cloud and mist clearing away very quickly. and the rain also clearing from northern scotland. it should brighten up

in the northern isles later in the day. a warmer day for most then. 23 degrees or so in edinburgh. probably about 23, 2a for western counties of northern ireland. but cooler in london — instead of around 26 or 27 it has been over recent days, it will be about 22. still warm in the sunshine and we've got more of the same to come on friday. most of us will have sunshine from dawn till dusk again with very little in the way of cloud. the highest temperatures always likely across more northern and western areas of the uk. 25 or so in the glasgow area. now, how's the weekend shaping up? 0ur area of high pressure is still in charge, still keeping these atlantic weather fronts at bay, and that means we've got more of the same. that said, it will turn quite breezy for some of us, but nevertheless, we do have more of that warm sunshine to come. temperatures in glasgow peeking around 2a degrees celsius. enneskillen, 23, maybe a 2k through the weekend, and further south, quite widely we'll see temperatures in the mid—20s. some of the warmest weather in cardiff, 27 on saturday. that's your weather.

this is bbc news with the latest headlines for viewers in the uk and around the world. i'm david eades. the death toll in the united states from the coronavirus pandemic has now officially passed 100,000. test and trace, the system to find people who come into contact with those infected with coronavirus, starts in england today. thousands of protesters fill the streets in minneapollis and police fire tear gas after the death of an unarmed black man whilst in police custody. and professional rugby league is kicking off in australia after being forced to shut down because of covid—19.