Mohandas Pai chimes in Abhijit Banerjee’s proposal: Govt can use RBI money to help poor in lockdown

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April 14, 2020 4:01 PM

While the Narendra Modi-government promised ample supply of essential items, TV Mohandas Pai today said the financial relief is not nearly enough to help the poor of the country tide over the impending economic crisis.

recession, g20, eiu global recession, recession in india, coronavirus, covid 19Mohandas Pai suggested that the government dip into RBI’s Rs 7 lakh crore reserves and take Rs 3 lakh crore out of it to help the most vulnerable sections of the society.

While the Narendra Modi-government promised ample supply of essential items, former Infosys director Padma Shree awardee TV Mohandas Pai today said the financial relief is not nearly enough to help the poor of the country tide over the impending economic crisis and the ongoing lockdown. Highlighting the shortcomings in Finance Minister Nirmala Sithraman’s relief package, Mohandas Pai, board member NSE India, said in an interview to CNBC TV18 that the government cannot expect a person to strive on Rs 500-2,000 per month, some ration and a gas stove.

Instead, as Prime Minister Narendra Modi today extended the lockdown till 3 May 2020, Mohandas Pai suggested that the government dip into RBI’s Rs 7 lakh crore reserves and take Rs 3 lakh crore out of it to help the most vulnerable sections of the society. RBI is fully-owned by the sovereign government, and all the money lying with the RBI actually belongs to the government, and in turn to the public, Mohandas Pai said. Thus, the government must be able to ask RBI to give part of that money to mitigate the impact of the once in a lifetime crisis, he added. The Bimal Jalan Committee on Economic Capital Framework had earlier suggested that RBI’s surplus reserves should be transferred to the government.

Earlier, Nobel laureate Indian-origin economist Abhijit Banerjee had also said that FM’s relief package is not enough and the government will be required to float some more money to help the poor. “Even for India’s very poor Indians, Rs 500 is nothing. It is not quite there,” Banerjee had said in an interview to the news channel in the beginning of this month. He had also then said that a bigger package will be required if the coronavirus situation persists and the government decides to extend lockdown for longer than a couple of weeks. The government has today announced the extension of lockdown for 19 more days.

Further, Mohandas Pai also said that measures such as cash transfers and immediate GST refunds may help firms stay afloat during the crisis, and cut the risk of mass lay-offs.

As migrant workers remain stranded on roads and shelter houses, with no jobs in sight for some time, FM Sitharaman had earlier announced Rs 1.7 lakh crore relief package. Aimed at reducing the pressure on migrant workers, women, disabled people and daily wage earners, the relief package was to be disbursed in the form of cash transfers and food security. Under this, the government had announced Rs 500 per account for women Jan Dhan account holders. In addition to this, the government had also announced extra grains and gas cylinders in the coming three months. However, Abhijit Banerjee said that the time is now ripe for the government to be “expansionary” rather  than being “tight-fisted.”

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