In an interaction with Congress leader Rahul Gandhi on Tuesday, Nobel Laureate Abhijit Banerjee raised concerns towards a chain of bankruptcies and demand shortfall in dealing with the economic fallout of COVID-19 and said India needs a "stimulus package".
"There are two concerns, one is how to avoid a chain of bankruptcies, maybe writing off a lot of debts...Second is demand shortfall and getting some cash into hands of people is the best way to kick start the economy," Banerjee said during an online interaction with the Congress leader.He said direct cash transfer and direct benefit transfers are required to help the states and needy, including migrant workers.
"To give cash to people, we really need some machinery. Migrants may not have access to that. We should give a bunch of money available to the state government for them to try out new strategies. We have to be willing to give money directly to state governments and not fear mismanagement of funds," he said.
He stressed that India needs a stimulus package like the US and Europe and spending is the biggest step for economic revival.
"We need a stimulus package. That's what the US, Europe, Japan did but we are still talking about 1 per cent of GDP which is a huge concern. A monitor body for debt payments is a good step. However, targeting micro, small and medium enterprises sector is not the correct approach because the idea is to raise demand," he said.
Citing the problems faced by the people especially in rural areas, he said the government should provide temporary ration card to everyone and added that AADHAR-based public distribution system would have been really helpful during the current crisis.
( With inputs from ANI )