Abhijit Banerjee, who won the Nobel prize for economics last year, says the two most urgent needs of migrant workers and the urban unemployed which the government must tackle immediately is food and housing.
The government must issue temporary ration cards for three or six months and give them food. He said the government must also open the sluice gates and get money out to these people. If their accounts are in their villages it should use NGOs to reach them.
In a 35-minute interview to Karan Thapar for The Wire, professor Banerjee said the public distribution systems’ ability to reach the poor and needy is hobbled by the measures that have been put in place to check malfeasance. Consequently you have stories in the Indian Express that only 10% of the free pulse allowance promised in March has been distributed.
Speaking about reports carried by The Wire and other papers that demand for NREGA jobs has increased perhaps ten fold whilst supply has shrunk by over 80%, Banerjee said the govt should not rely on actual NREGA work but use the 2019 NREGA rolls to get money to people.
Banerjee said the plight of the poor was as much of an emergency as anything else but the govt was not doing its damnedest to help. He said it must do everything it can.
On the three-zone basis on which the government plans to open up the economy from Monday he said he was worried that many things were not clear and the police could get confused quickly. He said a lot of effort needs to be put in by the government to clearly communicate what is permitted and what is not.
Asked by The Wire as to what would his advice would be to the government as it prepares to relax the lockdown and revive the economy, Banerjee bluntly said “spend more money”. He said the concept of macro economic responsibility is a red herring. He said the government should print money and spend.
Banerjee told The Wire the fiscal deficit should be the government’s least concern. He said the ratings agencies should be told India has never defaulted. He said although he did not have a precise figure he had worked out he would be comfortable if the government’s revival package amounted to 5 or 6% of GDP.
Speaking to The Wire about the MSME sector, which accounts for 30% of GDP and 50% of exports, Banerjee said the best way to help it was to revive overall demand by giving money to the bottom 60% of the population. He said this would be easier and better than schemes specifically targeted at the MSME sector.
Banerjee told The Wire it would be a mistake if the government considered the formal sector an area of lower priority as some newspaper reports suggested it did.
This is a paraphrased précis of Banerjee’s interview. Please see the full interview for accurate details. Here is the link:
