Economist Abhijit Banerjee on Sunday said that he probably would not have won the Nobel Prize if he was in India.
“I benefited enormously from a place [Massachusetts Institute of Technology] where I had the world’s best potential PhD students,” Banerjee said on the sidelines of the 13th Jaipur Literature Festival, reported News18. “And that is important. All this work that I am taking credit for is mostly done by others. My students, collaborators, and friends and that is what makes it valuable. It is not that there is dearth of talent here, but bringing together of people on a large scale changes it. It is hard to do it alone.”
Banerjee, Esther Duflo – who are married to each other – and Michael Kremer won the 2019 Nobel Prize for economics in October. They won it “for their experimental approach to alleviating global poverty.” Banerjee and Duflo co-founded the Abdul Latif Jameel Poverty Action Lab in 2013 and teach at the Massachusetts Institute of Technology. Kremer teaches at Harvard University.
Banerjee said there was no silver bullet to alleviate poverty. “Poverty, like cancer, is many problems,” he said. “There are many diseases. Some people are education poor, some are heath poor and some asset poor. You have to figure out what is missing. Trying to solve everything with one action is unviable to work and never does work.”
He advocated for freebies to the poor. “There is so much prejudice about the abilities of the poor,” said the Nobel laureate. “Give the very poor some asset. Not lend, but give them an asset. Maybe a cow, some goats or trinkets to sell, then you look what happens to these people after 10 years. They will be 25% richer, they will be healthier and happier. It encourages them to keep trying and they work harder than the people who didn’t get the assets.”
‘Government not in a position to bail out banking sector’
Banerjee also spoke about the crisis in the banking sector. “We are in a deep cycle,” he said. “It will take some time to fix things, particularly the banking sector. We don’t have the money to do what China did which was to put the money in the banking sector, write off the loans. We cannot really afford that right now. The government really is not in a position to bail it out, so we are talking about a long process of attrition, that’s going to be costly.”
Banerjee said the demand slowdown in the automobile sector also shows that people lack confidence in the economy. He added that the slowdown in the economy will also adversely impact poverty alleviation in the country as urban and rural sectors are interdependent. “Poverty alleviation has been happening mostly on the strength of the fact that urban sector creates low skill jobs, and a lot of rural sector works in the urban sector and sends money back,” he said, according to PTI. “That’s the peak source of transmission of growth from urban sector to rural sector. And as soon as the urban sector slows down the rural sector, the people in construction work don’t have as many jobs. All of that will feed back on the rural sector.”
The growth rate of the Indian economy has plummeted over the last three years. In the second quarter of 2019-’20, the Gross Domestic Product recorded a six-year-low growth rate of 4.5%. The government has predicted that India will grow at just 5% for 2019-’20, the lowest in 11 years. Meanwhile, retail inflation rose to a five-and-half year high of 7.35% in December 2019. The government had in September last year slashed the corporate tax rate for domestic firms from 35% to 22%.
The Indian-American economist said the government should give people the real picture. “They [investors] don’t know where they are going, what they are getting into, I mean those are real issues the government should look into,” he said. “If it wants to have more investment and more involvement in the global economy, then I think it needs to provide the true data to people.”
He also had some good things to say about the overall Indian economy. Banerjee said that there is a huge reduction in poverty in India in the last 30 years. “Poverty was 40% in 1990, and now, it is less than 20%,” he added. “Since the population has grown, it is an enormous reduction in the number of poor people.”
On being asked if he would accept the post of Reserve Bank of India governor, Banerjee said no. “Because to be an RBI governor, you better be a macro economist,” he said, according to News18.
‘India lacks strong Opposition’
The Nobel Prize winner said India lacks “good Opposition” and political parties have not been able to create enough pressure on the government. “There would be no pressure on the government to deliver in absence of a good Opposition,” he said. “The government does whatever it thinks is right. It is a wrong situation. Democracy works well where there is strong opposition.”
Banerjee said the Opposition was disunited. “There are many factions,” he added. “So the pressure which is there for a stable opposition that pressure has not yet been created.”
His comments come at a time when India is witnessing large-scale protests against the Citizenship Amendment Act and the proposed National Register of Citizens. However, most of these protests have been leaderless. The Citizenship Amendment Act has been widely criticised for excluding Muslims. The government’s critics and some protestors fear that the amended law and the National Register of Citizens will be misused to target Muslims since the Citizenship Act now has religion as a criterion. The Citizenship Amendment Act provides citizenship to refugees from six minority religious communities from Bangladesh, Afghanistan and Pakistan, provided they have lived in India for six years and entered the country by December 31, 2014. Twenty-six people died in last month’s protests against the law – all in the BJP-ruled states of Uttar Pradesh, Karnataka, and Assam.