‘Give Temporary Ration Cards, Bigger Stimulus Package’: Abhijit Banerjee to Rahul Gandhi on Covid-19 Hurdle

‘Give Temporary Ration Cards, Bigger Stimulus Package’: Abhijit Banerjee to Rahul Gandhi on Covid-19 Hurdle

New Delhi: Suggesting methods to help poor fight the after-effects of coronavirus lockdown, Nobel Laureate Abhijit Banerjee on Tuesday said that in situations like the one created by the pandemic, a nationalised Aadhaar card would have been beneficial for migrant workers as it would have given them access to free ration.

“I think nationalisation of the Aadhaar would have been great now, especially for migrants. They could have gone to a PDS store in Mumbai and demanded ration. But right now they cannot do that. There is also, for example, NREGA. The migrants cannot demand employment in Mumbai, there is no NREGA there,” he said during a conversation with Congress leader Rahul Gandhi.

The economist also suggested the introduction of a temporary ration system for those in need and a suspension of other ration cards for the time being.

Banerjee made this statement in his interview with former Congress president Rahul Gandhi. Gandhi has been hosting a series of deliberations with experts on the economy and its health.

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.”

Spending is the easiest way to revive the economy amid the Covid-19 crisis, he told the Congress leader, adding that a direct transfer to people to spend was a good way to ensure this.

“The real problem in the very short run is that these policies, good policies, put in place by the UPA are inadequate and the present government in a sense absolutely embraced them,” Banerjee said.

On May 4, the Congress party tweeted a 1.44-minute clip from their conversation and the full interview was released on Wednesday.

In the first such dialogue, which was held last week, Gandhi discussed the coronavirus pandemic and its economic implications with former Reserve Bank of India (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.

Talking about transferring benefits to the poor, Abhijit Banerjee said the government needed a mechanism with which the Centre would transfer the money to state governments.

“The real challenge is for people who are not covered by social security schemes. No such security cover is there for a large population like the migrant labourers,” Abhijit Banerjee said.

During the course of the discussion, Rahul Gandhi raised the issue of small businesses facing a cash crunch, to which Abhijit Banerjee said, “We need a large stimulus package like the US. India has announced a package that is about to 1% of its GDP and US has announced a package of 10% of its GDP.”

“People are not buying in these times and spending is the easiest way to revive the economy. We cannot shut the entire retail sector because they are situated in the coronavirus red zone,” Banerjee noted.

Speaking on the migrant worker crisis, Abhijit Banerjee said, “The migrant problem cannot be handled by the state governments alone and the Centre needs to manage this.”

To this, Rahul Gandhi added that the states should be given the freedom to manage the lockdown but the present government at the Centre held a different view.

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.”

On the issue of bouncing back from the economic crisis, Banerjee said two concerns had emerged.

“One is how to avoid a chain of bankruptcies, may be 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 realised that we need to put money in people’s hands. And we should be taking a cue from them.”

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