Terming the 23.9 per cent fall in economic growth in June quarter alarming, former Reserve Bank Governor Raghuram Rajan has said bureaucracy should come out of complacency and take meaningful action.

The current crisis requires a more thoughtful and active government, he said, adding unfortunately, after an initial burst of activity, it seems to have retreated into a shell.

"The sharp decline in economic growth should alarm us all. The 23.9 per cent contraction in India (and the numbers will probably be worse when we get estimates of the damage in the informal sector) compares with a drop of 12.4 per cent in Italy and 9.5 per cent in the United States, two of the most Covid-19-affected advanced countries," Rajan wrote in a post on his LinkedIn page.

He further said the bureaucracy needs to be frightened out of their complacency and into meaningful activity. "If there is a silver lining in the awful GDP numbers, hopefully it is that''.

Rajan, currently a professor at the University of Chicago, said the Covid-19 pandemic is still raging in India, so discretionary spending, especially on high-contact services like restaurants, and the associated employment, will stay low until the virus is contained.

The eminent economist pointed out that the government's reluctance to do more today seems partly because it wants to conserve resources for a possible future stimulus.

"This strategy is self-defeating," he opined.

Citing an example, Rajan said if one thinks of the economy as a patient, relief is the sustenance the patient needs while on the sickbed and fighting the disease.

"Without relief, households skip meals, pull their children out of school and send them to work or beg, pledge their gold to borrow, let EMIs and rent arrears pile up, Essentially the patient atrophies, so by the time the disease is contained, the patient has become a shell of herself," he noted.

Rajan stressed that the recent pick-up in sectors like auto is not an evidence of the much awaited V-shaped recovery.

"It reflects pent-up demand, which will fade as we go down to the true level of demand in the damaged, partially-functioning, economy," he noted.

Rajan pointed out that because of the pre-pandemic growth slowdown and the government's strained fiscal condition, officials believe it cannot spend on both relief and stimulus.

"This mindset is too pessimistic, but the government will have to expand the resource envelope in every way possible, and spend as cleverly as possible," he said adding it also has to take every action that can move the economy forward without additional spending.

"All this requires a more thoughtful and active government. Unfortunately, after an initial burst of activity, it seems to have retreated into a shell," the former RBI Governor added.

Noting that India needs strong growth, not just to satisfy the aspirations of country's youth but to keep its unfriendly neighbours at bay, Rajan said temporary half-baked reforms , such as the recent suspension of labour protection laws in a number of states, will do little to enthuse industry or workers, and give reforms a bad name.

He also suggested that reforms can be a form of stimulus, and even if not carried out immediately, a timeline to undertake them can boost current investor sentiment.

"The world will recover earlier than India, so exports can be a way for India to grow," he opined.

The government in May announced nearly Rs 21 lakh crore stimulus package to help the nation tide over the economic crisis induced by the coronavirus and subsequent lockdown.

India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment.