Nobel laureate and economist Abhijit Banerjee on Sunday said the slowdown in the economy, which had posed a serious challenge to the country, might adversely impact poverty alleviation because the urban and rural sectors depended on each other for creation of jobs and availability of low-skilled workers. “There is no early end to the economic slowdown that has gripped India,” he said.
At a session on “Poor economics: fighting global poverty” at the Jaipur Literature Festival here, Dr. Banerjee said it might take a long time to get out of the difficult situation, as there was not enough money to improve the economy. “There is a need to work on several things gradually. We have a great demand deficit... People are not spending because they are not confident.”
The Indian-American economist, who along with two others won the Nobel Economics Prize in 2019, said the slowdown in the urban sector was bound to have “negative consequences” for the entire economy. “Besides, the banking sector is stressed and the government is not in a position to bail it out,” he said.
Laying emphasis on a multi-pronged approach for poverty alleviation, Dr. Banerjee said it required “many silver pallets rather than a single silver bullet” to deal with the issue. “Like cancer, poverty has several problems. Some people are education-poor, some are health-poor and some asset-poor. You have to figure out what is missing.”
Dr. Banerjee said the subsidies were important for the poor and should not be done away with. The people living in abysmal poverty should be helped with some assets, he said, adding that it would encourage them to keep trying and work harder. “The confusion arises when subsidies are given to those who may not need them,” he said.
The 58-year-old economist said the country needed a “better Opposition” for effective governance. “When the Opposition is weak, it can lead to a situation where the government can think it can do anything.”
Even the ruling party should want a better Opposition to keep it under check, Dr. Banerjee said, while affirming that the link between authoritarianism and economic success was often an illusion. He said the foreign investors would get nervous if the government failed to provide them with the reliable data, which would help in more investments and ensure global participation.
Asked if could have won the Nobel Prize if working in India, Dr. Banerjee said he had benefited enormously from the Massachusetts Institute of Technology, where he is Professor of Economics, as it has the world’s best Ph.D. students. “My students, friends and collaborators have worked for me. There is no dearth of talent here [in India] but bringing together people on a large scale changes it... It is difficult to do it alone.”
