Govt's special economic package certainly not an eyewash: Nobel laureate Abhijit Banerjee

Banerjee hoped that the package will give a boost to the supply side which will drive economic recovery.

Before the announcement of the fourth phase of the lockdown to contain the spread of coronavirus, PM Modi had announced the special economic package to support all sections of the society and in making India self-reliant.

Speaking exclusively to News18.com, Banerjee said, “It (economic package) is certainly not an eye-wash. It is an ambitious plan to redefine a lot of the economic rules of the game that we have operating under, and hoping that this will give a boost to the supply side which will drive economic recovery.”

“It will take some work to understand what the proposed changes exactly will be, so I will reserve my judgment on those, but I tend to believe that these supply side changes will be slow to have an impact on the earnings of the average person and therefore, the government needs to worry more about whether this will address the massive demand shortfall,” he said.

Banerjee, who heads the Global Advisory Board formed by West Bengal Chief Minister Mamata Banerjee to handle the COVID-19 crisis, however, batted for direct cash transfer to the poor.

"I still think the economy and the poor will benefit from a large-scale intervention that gives every household some cash. These people have no money and no purchasing power. They should get some cash in hands from the government to secure their roti, kapda and makan,” said the Nobel laureate.

On being asked to respond over some states mulling the option of tweaking labour laws in India, where they might be forced to work more and paid less, he said, “There are apprehensions that this will snatch away the rights of the poor workers. Again, think of this as the first move in a longer game."

"The Bharatiya Mazdoor Sangh (BMS) has come out strongly against them and my guess is that they will be extensively negotiated,” said he.

Banerjee also suggested that the marketing option for agricultural needs should be transformed in the farmers' interest.

"I think the rural infrastructure, especially the sector relating to agricultural marketing needs to be transformed in the farmers' interest. West Bengal, for example, suggests that the 'intermediaries' hold a huge amount of market power. That said, it is not clear that now is the time to do this, when the government needs all hands on board to fight the pandemic,” said he.

On being asked to comment over the pressure faced by the corporates to combat the crisis situation owing to the pandemic, Banerjee said: "The United States has had the government which essentially takeover the salary payments to redundant employees for small and medium enterprises. Short of doing that it may be a bit heroic to assume that the employment will be protected.”