As per the Nobel laureate Abhijit Banerjee, spending is the easiest way to revive the economy and it must go beyond the poorest of the poor.
New Delhi| Abhijit Banerjee, Nobel laureate and economist, on Tuesday, said the nationwide lockdown has surely created havoc on the economic aspect.
He also said that the administration is not clear how much it is willing to spend on a stimulus package as 1% of GDP is not enough to revive the situation.
“A lot of us have been saying that we need a stimulus package. That’s what the United States is doing, Japan is doing, Europe is doing. We really haven’t decided on a large enough stimulus package. We are still talking about 1% of GDP. United States has gone for 10% of GDP, ” Banerjee said.
Nobel Laureate said that India needs a bigger stimulus package and money should be put in the hands of people to revive demand.
The interaction that cash transfers must go beyond the poorest of the poor, he emphasized.
“Giving money in the hands of everybody, so that they can buy in stores or they buy consumer goods.”
“There are 2 concerns, one is how to avoid a chain of bankruptcies, maybe writing off a lot of debts…Second is demand shortfall and getting some cash into hands of people is the best way to kick start the economy”, the Banerjee said in an interaction with Gandhi.
He also recommended that the government should hand out temporary ration cards to people to deal with the problem of food distribution.
“I would say bottom 60% of the population, we give them some money, nothing bad will happen in my view,” said the economist.
Abhijit also suggested that while coming out of lockdown, there has to be due diligence. He said that we should not come out of the lockdown when too many people are getting sick.
The total cases in India surged to 46,433 including 1,568 deaths amid COVID-19 lockdown.
In the past 24 hours, 195 casualties were recorded, highest so far. A staggering 3,900 new cases of COVID-19 were recorded in the last 24 hours.