NEWS
21/10/2019 4:31 PM IST

5 Things Nobel Laureate Abhijit Banerjee Said About Indian Economy

Banerjee said that the banking sector was facing a huge crisis and that the Modi government needed to be more open to criticism.

Indian-American Abhijit Banerjee, who won the 2019 Nobel Economics Prize with Esther Duflo and Michael Kremer, has expressed concern over the slow growth of the Indian economy and the banking sector in his recent interviews.

Talking to The Wire in 2017, he had been critical of Narendra Modi government’s demonetisation decision and called it “weird”. “I don’t think there was any serious economics in it and there was no particular reason why it would do much good,” he had said.   

Here are five things the Nobel Laureate has recently said about the economy and the government:

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1. “The economy is doing very badly in my view,” he told a press conference at the Massachusetts Institute of Technology after wining the prize. Referring to the numbers put out by the National Sample Survey, that give estimates about the average consumption in urban and rural areas in India, Banerjee, according to PTI, said, “the fact that we see is that between 2014-15 and 2017-18, that number has slightly gone down. And that’s the first time such a thing has happened in many many many many many years so that’s a very glaring warning sign.”

2. Banerjee has also been critical of the Modi government. He said the government’s way of handling “pesky” institutions was to either change the law or appoint people who will agree with the government, according to The Print. He said the Modi government should be more open to criticism. “It is important to not act against people who look like they were contradicting the government,” The Print quoted him as saying.

3. Talking to Karan Thapar, the Nobel laureate said rural demand has collapsed because the government deliberately lowered minimum support prices and depressed agricultural spending to contain urban inflation. 

4.  Asked about the Indian economy, Banerjee told Roshan Kishore of the Hindustan Times, “I think there’s a Keynesian or a demand driven downturn which feeds on itself. I don’t have money, so I don’t buy biscuits, so the biscuit company shuts down and they don’t buy.” The best short-term action, he said, is to pump demand into the hands of those who spend. Read the full interview here.

5. Banerjee told News18 that the Indian banking sector was facing a huge, deep-rooted crisis that required immediate attention. He said “it’s been messed up for many, many years and, as a result, it’s a deep problem now...in the sense...it’s a lot of money that needs to be spent and the government doesn’t have that kind of money to fix the banks.” He thinks this is an opportunity to sell the banks (ailing ones). 

(With PTI inputs)