India needs to more for its poor people, says the Nobel laureate and Indian economist Abhijit Banerjee.
“We haven’t done anything close to enough,” said Banerjee, urging the Government of India to provide enough relief to millions of Indians directly hit by the lockdown.
Stating that government was right in its decision to impose lockdown to control Covid-19 outbreak, he said, “Lockdown is not the end of the story.”
“This disease is going to be with us for a long time until a vaccine arrives, which is not anytime soon,” the Nobel prize winner noted.
In this regard, he asks the government to think of a well-articulated plan about ‘what’s next?’.
“The economy was already facing a demand slump. The [coronavirus] outbreak is a double whammy and many people have lost their earning capacity. There’s an additional demand slump now,” he adds.
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He says the government should be liberal in bailing out those facing acute poverty due to lack of earnings in the lockdown period.
Over the point that how this money will help when the markets are closed, he says, “People need reassurance. And the government has to be proactive in reassuring people. To begin with, you can tell people that money is coming and create a mood for demand.”
He says public should be in a position to buy when the markets open up and the supply of goods and services resume.
Banerjee further added that millions of Indian households stand eligible for the government welfare schemes and direct cash benefits.
The government should also identify the beneficiaries excluded from the list through the ‘local community reporting mechanisms’.
“There are ways. It won’t be always accurate in identifying who’s deserving of the benefit and who’s not. But we are not trying to be perfect at this point in time. This is an emergency,” Banerjee adds.
He says the government should even think of printing extra money if required to fill the current needs and expansion of welfare schemes.
“The US has taken the view that it can print money and spend it. I don’t know why India shouldn’t…”
“…Possibly there is the fear of inflation, when there is not much supply of goods and services. But India has to do something about [bridging] the income gap that has been created. The government has to be more aggressive about spending money,” he said.
Banerjee says the new challenge ahead is to find ways to open up market while also ensuring that the virus doesn’t spread and cause another lockdown.
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