“India needs bigger stimulus package”: Nobel Laureate Abhijit Banerjee to Rahul Gandhi

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India should put in a bigger stimulus package to revive demand, Nobel Laureate Abhijit Banerjee said in a video chat with Congress leader Rahul Gandhi, asserting that putting money in hands of people would be the best thing to revive demand.

Congress leader Rahul Gandhi had a video chat with Nobel Laureate Abhijit Banerjee on Tuesday on the plan to boost economy post lockdown.

Benerjee, while talking to the congress leader suggested putting cash in the hands of bottom 60% people to help revive demand.

“As the US,Japan and Europe are doing the same, we really haven’t decided on a large enough stimulus package. We are still talking about 1 % of GDP; the US has gone for 10% of GDP.”, Abhijit Banerjee said.

As Rahul Gandhi asked whether some form of direct cash transfer to needy or poor people, Dr Banerjee answered in the affirmative saying that 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 Nobel Laureate Abhijit Banerjee .

“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,” the economist said.

The economist also suggested that the government should issue temporary ration cards to people to deal with the food distribution problem.