Centre has not done enough for the poor, Abhijit Banerjee tells BBC

Ghughuti Bulletin


The Indian government has to be more aggressive about spending money to support the poor during the COVID-19 pandemic and lockdown, according to Nobel Prize-winning economist Abhijit Banerjee. In fact, India should not be afraid to print money to fund an expansion of welfare benefits, he told the BBC.

So far, the Centre has announced a welfare package said to be worth around ₹1.7 lakh crore – just 0.8% of GDP – to provide extra food grain and cash support to vulnerable sections of the population.

Also read: Lockdown displaces lakhs of migrants

“We haven’t done anything close to enough,” Dr. Banerjee said in an interview with the British broadcaster on Friday. “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.”

The India-born economist, who won the 2019 Nobel Prize for Economics for his work on randomised control trials to test the impact of small policy interventions, has long advocated a basic income scheme. In the run-up to this year’s budget, he recommended cash transfers for the poor as the way to boost demand and revive the economy.

Also read: Coronavirus | Centre slow to absorb lockdown impact on the poor, say activists

In his interview, Dr. Banerjee pointed out that the pandemic was a “double whammy” for those who had lost their earning capacity, at a time when the economy was already facing a demand slump. While he said a lockdown may have been necessary, he felt that a long-term view was necessary, given that the pandemic may not ease until a vaccine arrived.

“India needs to think of a clear, well-articulated plan on what should be done next,” he said.

He recommended that additional cash be immediately given to the beneficiaries of existing welfare schemes, so that a “mood for demand” could be created once the lockdown is lifted.

“People need reassurance. And the government has to be proactive in reassuring people,” he told the BBC. “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.”

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