As per Nobel laureate, Abhijit Banerjee’s opinion the Modi government should look at providing cash transfer to below 60% of India’s population to help revive the economy rather than specifically targeted package at micro, small and medium enterprises. He pointed out at the spending power of the people which has rose with no flow of cash within months.
The post lock-down period is more about reviving the demand and pace the economic growth. Giving cash in hands to people gives them the purchasing power to buy the essential consumer goods for use. Abhijit Banerjee sees that giving the money for spending is the best way to create demand for products and to initiate supply within the production houses.
Targeting on the other hand can be a turn down as for the person whose business has been shut for about six weeks, and have no idea how it is going to be dealt with. As for the time being once the exit plans from lock-down is in process, one has to initiate the demand and that is one such way to re-fuel the economy for the beginning.
India is showing static growth and was suffering even before the lock-down on the financial front. It barely has any economic measures which would positively impact the situation. Abhijit Only if the measures aren’t taken seriously the condition is going to worse.
To protect businesses from winding up and firms against bankruptcies, the government should cancel the interests and debt obligations by borrowers rather than rescheduling them. Abhijit The measures taken will have their pros and cons but in such situation the alternatives are similar to each other. The solution is to handle the economy from falling in the means of being in advantage.
The Indian economy has come to a virtual stand still and is going to take time to get back to shape after the Government extended the lock-down twice forcing many industries to shut and dislocating the migrant labors.