Covid-19: I need to move forward now to protect vulnerable sections: Kaushik Basu

MUMBAI: Old world bank economist Kaushik Basu He said the financial package announced by the prime minister is necessary but not sufficient given the dark clouds of recession and unemployment. Basu said that while government spending would create inflationary pressures within six months, it was necessary to move forward now to protect vulnerable sections and take corrective action later.
“If this Rs 20 lakh crore were an additional amount, this should be sufficient. People who are analyzing the details say it is not additional and includes what RBI has done. If the additional amount is half (than advertised) it is not enough, “said Basu.

Basu, professor of economics and professor of international studies Carl Marks, Cornell University He was on his way to a global online conference organized by Bennett university which was part of the Covid-19 Jaan Bhi Jahan Bhi series, sponsored by Darwin Industries. Bennett Univerity is an initiative of the Times Group.
Noting that Covid-19’s death rate of two deaths per million population was among the lowest, he said that steps must now be taken to protect the vulnerable. “The immediate concern should be the hundreds of thousands who walk hundreds of miles just to go home, those who walk in large groups but are alone,” Basu said.

To finance the stimulus, Basu said he was in favor of providing some space for deficit monetization or printing more money, but the RBI needs to be careful as inflation could fly and it had many other responsibilities.
“In March, the RBI was injecting its dollar reserves to stabilize the rupee. A small amount is worth printing, but RBI has to use a smart method to increase the fiscal deficit, ”he said. He also noted that the savings rate in India has dropped from 38% to 30% and this has a lot to do with banking. “If you keep knocking on the central bank’s door, the investment that has come down will be further reduced,” Basu said.