New Delhi: Congress leader Rahul Gandhi in his series of interaction with economic leaders, has now spoken to Nobel laureate Abhijeet Banerjee who has suggested that people should be given money directly if the government wishes to revive the economy fast. There should be Aadhaar-based PDS or a temporary ration card so that those who are stuck anywhere could get ration for their needs.
On May 4, the Congress party tweeted a 1.44-minute clip from their conversation and the full interview was released on Wednesday.
Speaking about the migrants, in particular, Banerjee said: “One of the ideas that were mooted in the last years of the UPA but also embraced by the current government was the idea that the Aadhaar would be made national and therefore would be used for Public Distribution System and other things. Aadhaar-based claims on PDS would make one eligible wherever they are. That would be wonderful to have right now.”
The Nobel laureate added that temporary ration cards should be given to everybody for the next six months in order to save people from a lot of misery as the benefit of these would allow a lot of locals to be able to go to the ration shops to avail food during these times.
Asked about the steps needed to pull the Indian economy from the impact of the lockdown necessitated by the coronavirus, Banerjee said, “Many countries have introduced a stimulus package for small businesses. We are yet to take concrete steps towards it. Moratorium on debt payments is a good move, but we need to do more.”
“Real concerns are supposed to be as to whether the economy will revive, and in particular, how does one think the possible time paths of this disease through that process,” he said, suggesting to target the MSME sector and that it would be the right channel.
“It is more about reviving demand. Giving money in the hands of everybody, so that they can buy from stores or consumer goods from elsewhere will help the economy and our country. So MSME produces a bunch of stuff that people will want. They’ve not been buying it. If they had money or even if you promise them money, it doesn’t have to be that the money is there right now,” said Banerjee.
Banerjee continued, “We have done a wise thing which is put a moratorium on debt payments. We could do a bit more – maybe permanently cancel it for that quarter. I think spending is the easiest way to revive the economy. A direct cash transfer – whether it’s to the poorest people – that is debatable. Targeting is extremely costly. I think it needs to be broader. We need to put money in the hands of people.”
To bounce back from the economic crisis, Banerjee said two concerns had surfaced. “One is how to avoid a chain of bankruptcies, maybe by writing off a lot of debts. Second is demand shortfall, and getting some cash into the hands of people is the best way to kick-start the economy. I mean, the US is doing it very aggressively and it is a Republican administration that is doing it just for economic survival. They have realized that we need to put money in people’s hands. And we should be taking a cue from them.”
Citing an example, he said that if anybody is in the red zone and is assured that whenever lockdown is lifted they will have money in their account, say Rs 10,000 in the account, they can spend it. “I think spending is the easiest way to revive the economy. Because then the MSME people get money, they spend it, and then it has the usual Keynesian chain reaction.”
Conversation with Banerjee is the second in the series after Gandhi spoke to former RBI Governor Raghuram Rajan. During that discussion, Rajan said that India should be cleverer in lifting the lockdown and open up its economy in a “measured way” soon to save jobs. He also said that Rs 65,000 crore should be spent to support the poor who have been hit hard by the crisis.
