Abhijit Banerjee: India should include a stimulus package large enough to revive demand | India Business News
Banerjee, while speaking to congressional leader Rahul Gandhi via videoconference, suggested handing over money to the lower 60% population to help revive demand.
He was discussing the economic impact of the COVID-19 pandemic with Gandhi as part of a series of dialogues broadcast on Congress’ social media.
Banerjee said it was important for India to announce a stimulus package large enough to face the crisis along the lines of what the United States, Japan and Europe are doing.
“We really haven’t decided on a stimulus package big enough. We are still talking about 1% of GDP. The United States has gone for 10% of GDP,” said the leading economist.
“We have done one thing that I think is prudent, which is to put a moratorium on debt payments. We could do more than that. We could even say that debt payments for this quarter will be canceled and will be taken care of by the government. “, said.
When asked by Gandhi about whether some form of the NYAY scheme proposed by Congress or the direct transfer of cash to people was the need of the hour, Benerjee responded affirmatively saying that it should not be limited only to the poorest.
“I would say that 60% of the population, we give them some money, in my opinion nothing bad will happen. If we give them money, some of them may not need it. Well, they will spend it. If they spend it would have an effect of encouragement, “he said.
Banerjee also suggested that the government should give temporary ration cards to people to deal with the problem of food distribution.
He said another concern looks to the future after COVID-19 and is a chain of bankruptcies.
“Maybe paying off a big debt is the way to go,” he suggested.
The other concern, said the prominent economist, is the deficit in demand.
“Putting some cash in the hands of the population is the best way to boost the economy,” he said.