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View: Direct cash transfer is not the vaccine for reviving GDP. It’s not even the anti-viral remdesivir

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Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as well as politicians like P Chidambaram and Yogendra Yadav, have been advocating more cash be put in the hands of people. But they haven’t answered ‘How?’, ‘How much?’, and ‘At what cost?’

Synopsis

Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as well as politicians like P Chidambaram and Yogendra Yadav, have been advocating more cash be put in the hands of people. But they haven’t answered ‘How?’, ‘How much?’, and ‘At what cost?’ What is the magic fiscal deficit number appropriate for balancing the macro consequences of direct cash transfers (DCTs)?

If simply printing more money and distributing cash would have made GDP rocket, then Robert Mugabe would be the world’s best Keynesian economist, and Zimbabwe the GDP king. John Maynard Keynes did advocate the printing of money in a ‘depression’ economy to create demand that would, in turn, engender more investments, and thereby enable the ‘virtuous cycle’ to kick in. If similar cash infusion is done today, it is highly unlikely it would revive

BY

Srivatsa Krishna

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