Indian economy on a shaky ground: Nobel laureate Abhijit Banerjee

The data currently available do not hold any assurance for the country's economic revival anytime soon, Banerjee said.

Published: 14th October 2019 07:10 PM  |   Last Updated: 14th October 2019 11:04 PM   |  A+A-

Abhijit Banerjee

Indian-American Abhijit Banerjee won the 2019 Nobel for Economics. (Photo | Twitter)

By Online Desk

KOLKATA: Even the joy of winning the 2019 Nobel Prize for Economics couldn't help Abhijit Banerjee brush aside his worries about the Indian economy.

"The condition of the Indian economy is on shaky ground. After witnessing the present (growth) data, just can't be sure about it (revival of the economy in the near future)," he told a news channel from the US.

"In the last five-six years, at least we could witness some growth, but now that assurance is also gone," he added.

Also Read: World Bank says India faces severe slowdown, cuts GDP forecast

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 that give estimates about the average consumption in urban and rural areas in India, 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 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.

He 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."

Banerjee, the second Indian-origin economist after Amartya Sen to win the Nobel Prize, said the award had come as a complete surprise to him.

"I expected my name would be considered after 10 years. Because, there are others who are senior to me and competent enough to bag the prize," he said.

"I worked in South Africa, Indonesia, China and West Bengal in India to collect material for my research work. When I tried to understand the questions raised by the poor, West Bengal came to mind because I grew up there."

The Nobel winner also admitted that he went back to sleep after getting the good news from Stockholm early Monday morning.

"Yes. It was very early in the morning. I'm not an early morning person. I figured it would be an assault to the system if I don't continue my sleep," Banerjee said in an interview with NobelPrize.org.

The trio won the 2019 Nobel Prize for Economics, which was announced Monday around 6 am New York time.

He said that he couldn't get much sleep later as news of the honour spread from India to Europe and he started getting calls.

When asked about the rare honour for Banerjee and Duflo to be awarded the Nobel as a married couple, he termed it "special".

ALSO READ | Very very happy and delighted: Amartya Sen on Abhijit Banerjee's Noble win

Only five other married couples have won the Nobel together in the prize's history.

"It's sort of been an entire family enterprise in the sense between JPAL and the research and working at MIT. There's lots of dimensions of the work that just becomes much more pleasant when you do it with your partner."

Banerjee said he has learnt an "enormous amount" from talking to people on the ground.

"The set of people I really owe an enormous amount to is the people who are both the people with whom we work with, whose lives we study in many ways, but also the people who work with them."

Crediting NGOs like Pratham and Seva Mandir for the work they do at the grassroots level, he said he has learned a huge amount from these organisations.

"For example, my personal experience that these organisations that work on a very large scale with very poor people has certainly been very important for us."

He added that "one should not have too much faith in one's own rationality and you should not have too much faith in the rationality of anybody else either."

ALSO READ | Delhi government's education reform scheme 'Chunauti' based on Abhijit Banerjee's model: Kejriwal

"We all learn together about the way the world is. And I think it's an antidote to the wishful thinking of all kinds." 

Banerjee told MIT News it was "wonderful" to receive the award, adding "you don't get this lucky many times in your life."

He noted that experiment-based work in development economics was a little-explored area of research 20 years ago but has grown significantly since then.

"The kind of work we've done over the years, when we started, was marginal in economics," he said.

The prize "reflects on the fact that somehow while we often pay lip service to the welfare of all, this is something that not always (is the) immediate focus of a prize like this," Banerjee said in an interview to NobelPrize.org.

He said he is delighted that "some attention was thrown this way."

"Not that I think all the other things that they get prizes for aren't important. But it does make people who work in this area feel a little more enthused. Lots of people in this world, who do real things, not people like us, people who do real things, this is somewhat of a prize for all of them," he said.

In that light, he added, the Nobel award is "great for the development field" within economics, reflecting the significance of work done by many of his colleagues.

Duflo, the 46-year-old former advisor to ex-US president Barack Obama, is the second woman and the youngest ever to win the economics prize.

"We are incredibly happy and humbled," Duflo was quoted as saying by the MIT News.

"We feel very fortunate to see this kind of work being recognised."

"We're fortunate to see this kind of work being recognised," Duflo told MIT News, noting that their work "was born at MIT and supported by MIT."

She called the work in this area a "collective effort" and said that "we could not have created a movement without hundreds of researchers and staff members."

The Nobel award, she said, also represented this collective enterprise, and was "larger than our work."

Duflo added that she and Banerjee were "absolutely delighted to share this award with Kremer," calling his work an "inspiration" for antipoverty researchers.

Nancy Rose, department head and the Charles P Kindleberger Professor of Applied Economics, said, "Esther and Banerjee have been exceptional colleagues and contributors to the MIT economics department."

"Their passion for the power of economics to do good in the world inspires us all, and their generosity and compassion in working with students and colleagues has propelled countless careers forward. We couldn't be more thrilled for this recognition of all they have done."

Rose added that "Abhijit, Esther, and Michael's work shows economic research at its finest. They have not only transformed the way economists approach the study of poverty and development economics, but deployed their findings to improve the lives of hundreds of million people across the globe. Their founding of MIT's J-PAL has created a vibrant network of scholars who are bringing evidence-based antipoverty policy into every corner of the world." 

Abhijit's mother Nirmala told The New Indian Express that she had learnt of her son winning the Nobel at "around 2.30 pm".

ALSO READ | Abhijit Banerjee, Esther Duflo: Supervisor-student, husband-wife now co-Nobel prize winners

"I was reading a book. My younger son called me and gave me the news. It was unexpected. I am feeling exactly what a mother of a Nobel laureate should feel. I tried to call him, but his cellphone kept ringing. May be, he was sleeping," said Nirmala, also a professor of economics, from her Kolkata residence. 

Elaborating how her son had developed an interest in helping the poor, Nirmala said, "There was a shanty in front of our apartment and he used to see the children living there. They used to play on the road in front of our apartment and he often used to interact with them. His interest in poor people's economics might have grown from his childhood experience." 

Banerjee completed his schooling in South Point High School before joining the Presidency College where he completed his B.Sc in economics in 1981. Later, he completed his post-graduation in economics at the Jawaharlal Nehru University, New Delhi before going on to obtain a PhD in economics at Harvard University in 1998.

Going by his mother's words, his father played a big role in shaping his future.

"Abhijit used to go with my husband Dipak Banerjee, who was a professor and head of the department, economics, at Presidency College, to attend classes. He was young but he had an interest in the subject. After his Class XII exam, he initially decided to pursue physics honours but later changed his mind and preferred to study economics," said Nirmala.

Also Read: As growth dips, are we stepping into a long, dark winter?

Economist Avijit Roychowdhury said he had seen Banerjee from close quarters at Presidency University. 

"He was a brilliant boy. I was senior to him. But his seriousness in pursuing his goals caught the attention of many students like me. I am feeling proud today to be who knows him personally," he said.

The 58-year-old economist bagged the coveted prize jointly with his wife Esther Duflo and another economist Michael Kremer for his "experimental approach to alleviating global poverty".

"I have been doing this research for the last twenty years. We have tried offering solutions towards alleviation of poverty," Banerjee, currently the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology (MIT), said.

(With PTI Inputs)

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