Nobel Prize winner Abhijit Banerjee said that in his view when the economy is going into a “tailspin”, is the time when “you don’t worry so much about monetary stability and you worry a little bit more about demand. Banerjee thinks that demand is a huge problem right now in economy.
Indian-American Abhijit Banerjee, who jointly won the 2019 Nobel Economics Prize with his wife Esther Duflo and Harvard’s Michael Kremer, said Monday that the Indian economy is “doing very badly” even as the government is increasingly recognising that there is a problem.
“The economy is doing very badly in my view,” he told a press conference at the Massachusetts Institute of Technology after winning the prize.
When asked about his opinion on the state of the economy in India and its future, he said, “That’s a statement not about what will work in the future but about what’s going on now. That I’m entitled to have an opinion about.”
Referring to the numbers put out by the National Sample Survey, that come out every 1.5 years and give estimates about the average consumption in urban and rural areas in India, Abhijit Banerjee said, “the fact that we see in that 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.”
“There is an enormous fight going on in India about which data is right and the government has a particular view of (that) all data that is inconvenient to it is wrong. But nonetheless, I think that this is something that I think even the government is increasingly recognising that there is a problem. So the economy slowing very very fast. How fast we don’t know, there is this dispute about data but I think fast,” he said.
Abhijit Banerjee added that he does not know exactly what to do. “The government has a large deficit but right now it’s sort of at least aiming to please everybody by pretending to hold to some budgetary targets and monetary targets,” he said.
Abhijit Banerjee said that in his view when the economy is going into a “tailspin”, is the time when “you don’t worry so much about monetary stability and you worry a little bit more about demand. I think demand is a huge problem right now in economy.”
Finance Minister Nirmala Sitharaman last week in Mumbai evaded a direct reply to a question on whether the government accepts there is an economic slowdown, and said the government is giving relief to all sectors who need help.
She said since the Budget in July, she has been meeting representatives of various industrial sectors, and sector-wise intervention is being made regularly.
Abhijit Banerjee, 58, and French-American Duflo both work at the Massachusetts Institute of Technology (MIT) while Kremer is at Harvard University.
In 2003, Abhijit Banerjee founded the Abdul Latif Jameel Poverty Action Lab (J-PAL), along with Duflo and Sendhil Mullainathan, and he remains one of its directors. He also served on the UN Secretary-General’s High-level Panel of Eminent Persons on the Post-2015 Development Agenda.
J-PAL, a global network of antipoverty researchers that conducts field experiments, has now become a major center of research, backing work across the world.
Walking into the press conference to a round of applause and standing ovation, Abhijit Banerjee in his opening remarks said that it is “wonderful” to get the Nobel Prize “because it’s a prize not, I think, for us, but also for the entire movement.”
He said about 400 professors are associated in some way with J-PAL’s work and are doing randomised control trials on issues as diverse as US school in the Appalachia to governance problems in Indonesia, getting children immunised in India and getting children under bed nets in Sub Saharan Africa.
“So, this is a movement that, in some ways, we are kind of the beneficiaries of. I think it’s still going to be wonderful for the movement that this prize was given because I think it’s going to make it a little easier to penetrate the many doors that you know are half-open to us or not quite open to us and hopefully bring the message of policy-based on evidence and hard thinking to many other places as well,” he said.
When asked how does he feel about being the sixth Nobel laureate from Kolkata, he said “I assume they’re all much more distinguished than me.”
On what he hopes to do going forward, he said, “to be honest, we hope that we will get to do more of the same. I think we’re actually quite excited about what we are doing. This was not work that we did a long time ago, we’re excited about what we’re doing now and it’s fun. We’re learning new things. I’m really excited to look at the results from our latest intervention.”
“So I think what I hope this will do is just open more opportunities to do more inventive things, but I don’t expect to do something entirely different. I think I’m content with what I’m doing and enjoying it very much,” Abhijit Banerjee said.