Nobel laureate and economist Abhijit Banerjee on Tuesday said that to contain the food problem in the country, government should hand out temporary ration cards with three months validity and extend it to three more, if necessary.
“In fact, we wrote an OpEd with Raghuram Rajan and Amartaya Sen, saying literally that handout temporary ration cards to anybody who wants one. In fact, put other ration cards in abeyance, just put temporary ration cards.
“Anybody who wants one, get a temporary ration card. Lasts for 3 months for now and maybe renewed for another 3 months if necessary, and honour that. Give everyone a ration card, anyone who walks in give them one. And use that as a basis for making transfers. I think we have enough stocks. I think we can keep going for a while,” Banerjee said in a video interaction with Rahul Gandhi on the economic fallout of the coronavirus crisis.
This is the second installment of the Rahul Gandhi’s discussion series that began with renowned economist Raghuram Rajan last week.
He said that the national lockdown has indeed created a havoc on the economic front and that the government is not clear how much it is willing to spend on a stimulus package as 1 per cent of GDP is not enough to lift the situation.
“A lot of us have been saying that we need a stimulus package. That’s what the US 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.
He said in the interaction that cash transfers must go beyond the poorest of the poor.
Gandhi noted that many small and medium businesses hit by the COVID-19 lockdown could “go bankrupt” because of the shock. This, he said, would cost jobs.
“That’s the reason a lot of us have been saying that we need a stimulus package,” the renowned economist agreed.
“That’s what the US 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.”
India should take a cue from the US by pumping in more money in the hands of the people to revive demand, Dr Banerjee said, while suggesting that one should try to be optimistic about overall economic revival in India post-lockdown.
“Giving money in the hands of everybody, so that they can buy in stores or they buy consumer goods,” he added.
Gandhi suggested he was talking about some form of direct cash transfer to people, Banerjee said the beneficiaries must be among the poorest, but it was important to decide what criteria to target.
“I would say bottom 60% of the population, we give them some money, nothing bad will happen in my view,” said the economist.
Banerjee said he believed while it was important to come out of the lockdown, one needed to be aware of disease’s path.
“The sooner you come out of the lockdown of course depends on the disease. You don’t want to take down the lockdown when a lot of people are getting sick. We have to kind of be aware of the time path of the disease,” he said.