New Delhi: In a dialogue with former Congress chief and current Wayanad MP Rahul Gandhi, Nobel Laureate Abhijit Banerjee stressed for a broader direct cash transfer scheme for all, and not just the poor, to revive the demand and spur up the economy.
"Revive the demand. Give money in the hands of everybody so that they buy consumer goods. I think spending is the easiest way to revive the economy," Abhijit Banerjee said.
"A broader DBT is required, not just for the poor. Targeting is extremely costly in this mess," Abhijit Banerjee added.
He was deliberating on the economic impact of the COVID-19 pandemic with Gandhi as part of a series of dialogues broadcast on Congress' social media handles. Banerjee said it was important for India to announce a large enough stimulus package to deal with the crisis on the lines of what the US, Japan and Europe are doing.
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"In the short run, the good policies put in place during the UPA would be inadequate. For people including migrant workers, there isn't a system and they are no MGNREGA for them, they are not eligible for Public Distribution System as they are not residents. The conceptualisation of welfare scheme based on the idea has collapsed," Abhijit Banerjee said.
"We really haven't decided on a large enough stimulus package. We are still talking about 1% of GDP. The United States has gone for 10% of GDP," the noted economist said.
"We have done one thing that I think is wise, which is to kind of put a moratorium on debt payments. We could do more than that. We could even say that the debt payments for this quarter will be cancelled and will be taken care of by the government," he said.
To Gandhi's question as to whether some form of the Congress-proposed NYAY scheme or direct cash transfer to people was the need of the hour, Banerjee answered in the affirmative saying it should not be limited just to the poorest.
"I would say the bottom 60% of the population, we give them some money, nothing bad will happen in my view. If we gave them money, well some of them might not need it. Fine, they'll spend it. If they spend it, it would have a stimulus effect," he said.
On decentralisation and giving more power to the robust state governments, Banerjee said, "The migrant movement question cannot be handled by a state government. It is odd that it is being handled bilaterally. This is place where you don't want to decentralise," Banerjee said.
Rahul Gandhi further spoke about states being given leverage to decide even on the issue of lockdown and giving option value to the states, to which professor Banerjee suggested that NGOs, civil societies should be brought in and states should be equipped with money to innovate schemes to reach the marginalised sections.
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