Nobel laureate Abhijit Banerjee on Tuesday said India needed a stimulus package to tackle the economic fallout of the lockdown put in place to contain the spread of the coronavirus. The economist made the remarks during an online conversation with former Congress President Rahul Gandhi.

“India needs a stimulus package, we have not decided on large enough financial package yet,” Banerjee said. “It is important to revive demand, nothing bad will happen if we give the bottom 60% more money. Give temporary ration cards to everybody; use those for transferring money, wheat and rice to them.”

He said it was important for India to announce a stimulus package to deal with the crisis on the lines of what the United States, Japan and the Europe are doing. “We have done one thing that I think is wise, which is to kind of put a moratorium on debt payments,” the economist said. “We could do more than that. We could even say that the debt payments for this quarter will be cancelled and will be taken care of by the government.”

The Nobel Prize-winning economist, who took part in the second of a series of dialogues planned by the Congress on the challenge posed by the pandemic, said spending is the easiest way to revive the economy.

Banerjee added that Aadhaar-based public distribution system would have helped the poor claim their rations where ever they are during the crisis. However, the use of Aadhaar in the public distribution system has been highly contentious, with mounting evidence showing it has led to the exclusion of the poor in multiple ways. Data analysis done by economists Reetika Khera and Anmol Somanchi shows states like Tamil Nadu and Chhattisgarh, which do not scan the fingerprints of PDS beneficiaries in ration shops for Aadhaar-based biometric authentication, have better food distribution rates than states like Rajasthan and Jharkhand which use Aadhaar.

“The real problem in the very short run is that good policies put in place by the United Progressive Alliance are inadequate and the government, in a sense, absolutely embraced them,” Banerjee said.

Follow today’s live updates on the pandemic here.

The Nobel laureate told Gandhi that direct cash transfers should go beyond the poorest people. “To give cash to people, we really need some machinery,” Banerjee said. “Migrants may not have access to that. We should give a bunch of money available to the state government for them to try out new strategies.”

He said the movement of migrants cannot be handled by a state government. “It’s a bit odd that it is being handled so much bilaterally,” Banerjee added. “I feel that is a problem...you should have tested people before they are allowed to move.”

Banerjee also suggested that one should try to be optimistic about overall economic revival in India post-lockdown.

Last week, former Reserve Bank of India Governor Raghuram Rajan told Gandhi that India needed to spend about Rs 65,000 crore to take care of the vulnerable sections such as migrant workers to tide over the pandemic.

India has so far recorded 46,433 coronavirus cases and 1,568 deaths, according to figures from the health ministry. The lockdown, imposed first on March 25 in the wake of the coronavirus pandemic, was to end on May 3. However, it has been extended by another two weeks till May 17.