India needs bigger stimulus package, says Nobel Laureate Abhijit Banerjee in conversation with Rahul Gandhi

Nobel laureate Abhijit Banerjee, while speaking with Congress leader Rahul Gandhi through video conferencing on Tuesday, suggested that India needs a bigger stimulus package to revive demand.

Banerjee asserted that putting cash in the hands of people would be the best way to boost the economy.

“We need a stimulus package. That’s what US, Japan, Europe are doing. We haven’t decided on a large enough stimulus package. We are still talking about 1% of GDP. USA has gone for 10% of GDP,” said Abijit Banerjee.

“We could even say debt payments for this quarter will be cancelled and taken care of by government. It’s not just a matter of rescheduling it, just permanently cancelling it. We could do that,” Banerjee said.

Banerjee also suggested that the government should hand out temporary ration cards to people to deal with the problem of food distribution.

Banerjee said he believed while it was important to come out of the lockdown, one needed to be aware of disease’s path.

“You don’t want to end 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.