Nobel laureate Duflo says cash transfer to poor makes sense economically as well

Pitching for cash transfers to the poor for helping them deal with the impact of the COVID-19 crisis, Nobel laureate Esther Duflo on Monday said doing so is not just a moral necessity, but an economic one as well, as it can create demand which will benefit all.

Duflo, a professor of economics at MIT, who was recognised for her work along with husband Abhijit Banerjee, also asked businesses to lobby for such efforts by the government in their own interest.

It can be noted that a lot of analysts have been flagging concerns about the impact of the crisis on individual finances since the lockdowns began.

The government has so far announced income support and upping works under the employment guarantee scheme as part of a Rs 1.7 lakh crore aid package but not taken a universal basic income type cash transfer package.

It is the responsibility of the government to ensure the cash transfer and this is something businesses should be keenly interested in, not just because it is the right thing to do morally, but it is the most responsible thing to do economically, Duflo said.

Speaking during a virtual talk organised by IDFC Institute and Samhita Social Ventures, she asked businesses to lobby for the same in their own interest as not doing so will hurt consumer demand.

On the migration, she said the government has to be more responsible in handling the situation and ensure that those undertaking the journeys do not become "super spreaders" in their villages spread across the country.

Educational institutions should not restart classes as if nothing has happened and should be given sufficient time to make the students revise the curriculum which has been covered already, she said, adding that this a fantastic opportunity for the redesign of the system to take care of the current set of worries as well.