The Trinity Has Spoken

Sen, Rajan, and Banerjee come together to make urgent recommendations to the government.

Amartya Sen, Raghuram Rajan, and Abhijit Banerjee have written this list of suggestions together

- They reiterate what many policy experts and grassroots activists have been saying. Large numbers of needy people are excluded from the Public Distribution System. They suggest that temporary ration cards be issued as speedily as possible so that those who need free rations can access them. (The speediest way to do this is give rations to anyone who approaches ration shops irrespective of whether or not they have a ration card. Self-selection works well where this has been tried. Read this for more details.)

- They echo Jean Dreze's recommendation to use the FCI's stockpile to make extra rations available generously. Adding that "any sensible public accounting system should not portray it as inordinately costly". (This is an implicit criticism of our accounting system that comes in the way of opening up food reserves. Dreze writes about this here).

- They note that the government's offer, increasing rations for 3 months to those covered by PDS, is not adequate also because the economy will take a while to start up after the lockdown is over. (President, INC, Sonia Gandhi and other activists have also suggested extra rations be made available for 6 months. Read here.)

- The economists point out that, in addition to dry rations, canteens need to be set up in collaboration with reputed NGOs to make food available to migrants and others stuck, away from home, and sending mid-day meals to the homes of enrolled children. (Economist Ajit Ranade in another article adds that "NGOs need to be given food-grain at a nominal PDS price or completely free, as also additional funds to buy cooking oil, vegetables and spices to meet the cost of food preparation.")

- Their final critique is that the cash transfers announced by the government are too little and narrowly targeted. They believe that "P Chidambaram’s idea of using the MGNREGA rolls from 2019, plus those covered by Jan Arogya and Ujjwala to identify the poor households and to send them 5000 rupees each to their Jan Dhan accounts, seems like a good first step. But we must recognize that none of these lists are perfect ... Therefore, as a part of the commitment to not miss the needy, there has to be funding available that state and local governments can use to find effective ways to reach those who suffer from extreme deprivation." (Esther Duflo and Abhijit Banerjee have spoken about why the government should simply print more money to fund DBTs without worrying too much about macroeconomic fallouts. Read here.)

- They urge the government to err on the side of caution and put aside worries about leakages, ghost beneficiaries etc for the moment because exceptional times call for exceptional measures. 

Amartya Sen, Nobel laureate in Economics, is professor of economics and philosophy at Harvard University; Raghuram Rajan, former RBI Governor, is professor of finance at the University of Chicago’s Booth School; Abhijit Banerjee, Nobel laureate in Economics, is professor at the Massachusetts Institute of Technology

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