Direct benefit transfer need of the hour: Abhijit Banerjee, Esther Duflo

Nobel Laureates Esther Duflo (right) and Abhijit Banerjee.
Aggressive quantitative easing (QE) and generous direct benefit transfers (DBTs) are needed to tackle the slowdown caused by Covid-19, according to Nobel Laureates Esther Duflo and Abhijit Banerjee.

Interacting with industrialists over a webinar organised by FICCI, Banerjee said it was time to take aggressive macro policy measures, and take risks even at the cost of inflation. “We should print money, and give that money, without worrying much about monetary targets… We can avoid 1929, and can be more like 2008-09 if we are more aggressive,” said Banerjee, adding that there were concerns over India being conservative in taking aggressive macro-economic policy decisions.

“Fortunately, India has infrastructure for DBTs in place… industries should not collapse and putting moratorium on debt is important,” said Duflo, adding that the moratorium should cover interest payment. Banerjee said there was no immediate need to transfer all the money, but there should be an assurance from the government about such transfers in future.

“Liquidity is not the problem. What is frightening people is the long-term problems. We really need to get that extra income in their hands,” said Banerjee.

Investment in pharma

There is immense opportunity for India to grab the pharmaceuticals market and hospital infrastructure, they said.

“The way we see the present situation, there should be a vaccine later this year. And India should not miss this opportunity. We have good production capacity and even if only the elder population needs to be vaccinated, that’s a challenge as well as an opportunity. It is worth thinking about building that capacity for vaccines,” said Banerjee.

Duflo said India has a strong advantage in the pharmaceutical sector, and could utilise it.

West Bengal factor

West Bengal needs to ramp up testing of Covid-19, so as to get accurate data and identify hotspots to tackle the problem, said Banerjee.

Chief Minister Mamata Banerjee announced on Monday that Abhijit Banerjee would be in the state’s advisory panel on Covid-19. “In West Bengal, there is willingness and a fair amount of information campaigns. We need to do more testing and identify hotspots,” he said.

On being asked if India should extend the lockdown, Banerjee said: “Today, the numbers show an uptick and the curve is getting steep. However, we need to wait for a week to get a sense,” he said.

During the lockdown, harvesting must be managed well. Further, with the Rabi harvesting season approaching, there should be enough infrastructure to ensure the product don’t go waste, he added. In the short term, recession would be like 1929 and 2008, which led to a drop in global output.

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