New Delhi: Nobel Laureate Abhijit Banerjee said on Tuesday that India’s economy is one of the world’s worst-performing economies. He also said that the government’s economic stimulus to deal with problems was not enough. However, Banerjee said that the country’s economic growth rate will improve in the second quarter of the current financial year.
The noted economist said in the online program that the country’s economic growth rate was already slowing down from the Covid-19 epidemic crisis. Real GDP growth rate fell from 7 percent in 2017-18 to 6.1 percent in 2018-19. At the same time it decreased to 4.2 percent in 2019-20.
He said, “The Indian economy is one of the world’s worst-performing economies. The country’s economy will see a revival in the current quarter (July-September). “
Banerjee said that the economic growth rate in 2021 will be better than this year. It is noteworthy that the country’s economy has fallen by a record 23.9 percent in the first quarter of the current financial year. Many agencies and institutes have forecast a decline in the economic growth rate in the current financial year.
Goldman Sachs revised its earlier estimate, forecasting the economy to decline 14.8 percent in 2020-21, while Fitch Ratings 10.5 percent. Banerjee, currently a professor at the Massachusetts Institute of Technology (FIT), said he did not think India’s economic stimulus package was sufficient. He said, “India’s economic stimulus was limited. This was an incentive from the banks. I think we could have done something more. “
Banerjee said, “The incentive measures did not increase spending on consumption of low income groups because the government was not willing to put money in the hands of these people.” The government announced an economic stimulus package of Rs 20.97 crore in May. This included cash support from the RBI. On inflation, Banerjee said that India’s growth strategy has been a closed economy. In this, the government creates a lot of demand, which leads to high growth as well as inflation.
He said, “India had a situation of high inflation and high growth for 20 years. The country has benefited immensely from stable high inflation in the last 20 years. ” In response to a question related to printing additional notes by the Reserve Bank to meet the deficit, he said, “Financing the deficit is a good idea.” Regarding the government’s self-reliant India campaign, Banerjee said that the term self-reliant needs to be used carefully.
He said, “If we try to buy raw materials from the domestic market, there will be problem with self-sufficiency. We need to become experts in the field in which we are good, only those goods should be imported. ”
Banerjee said that India needs to be more competitive globally. Asked if he would like to work for the government, he responded positively. Banerjee said, “I will definitely consider. I am one of those people who have a concern for the welfare of India… We should keep away ideological differences. ”
