Nobel Laureate Abhijit Banerjee on Tuesday, in a video talk with Congress leader Rahul Gandhi on the the economic fallout of the Coronavirus crisis, said spending is the easiest way of reviving the economy and that the Government should give direct cash transfer to MSMEs to spend.

This is the second video talk on the the economic fallout of the Coronavirus crisis organised by Rahul Gandhi. On April 30, he had a conversation with Former Reserve Bank of India (RBI) Governor Raghuram Rajan.

Speaking on, Banerjee observed that “sooner we come out of lockdown, better it is.” He, however, stated that a check on the Coronavirus disease must be maintained.

The economist called for handing out temporary ration cards to those in need. “Use that as a basis of making transfers, so that the problem of hunger is addressed,” Abhijit Banerjee said.

Speaking on the migrant issue, the Nobel Laureate told Rahul Gandhi that the movement of migrant workers cannot be handled by state governments alone and that people should be tested before they board the trains.

Rahul Gandhi, during the conversation, pointed out that India needs to restart demand in the economy faster. “The faster we do it, the more effective it is. Every second lost is damaging the economy further,” he observed.

Nobel Laureate Abhijit Banerjee pointed out that “if anyone wanted to believe in the strongman theory, this is the time to disabuse themselves.”

He said that money should be distributed to the state governments to try their own schemes and to be creative in reaching people who are excluded from welfare schemes using NGOs.

Banerjee further stressed on the need for a “large enough stimulus package” amidst the Coronavirus crisis.

“A lot of us have been saying that we need a stimulus package. We really haven’t decided on a large enough stimulus package. We are still talking about 1 per cent of GDP. The United States has gone for 10 per cent of GDP,” he said.

“If we sit on our hands, and say that we don’t want to do anything that could possibly go wrong, then we will make sure it goes wrong,” Banerjee added.

Former Congress chief Rahul Gandhi once again called for decentralisation of power during the crisis, to the extent that it can be handled at the local level.

“Parcel out things that can be handled at the district, state level. Of course, the big decisions should be national,” he said.

In an advise to the Centre, Gandhi said, “With the lockdown, give option value to the State to decide and understand the nature of the lockdown on their own”.

He added that the present Government prefers to centralise, but he “veers towards decentralisation”.

In his earlier video chat wth Raghuram Rajan, Gandhi had asked about the economist’s perception about the “crisis of centralisation” while saying that there is too much centralisation of power taking place and conversations are being stopped.

On this, Rajan opined that decentralisation is important both for bringing more local information to work and giving empowerment to the people.