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 numbers put out by the National Sample Survey, which come out every 1.5 years to 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 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's comments at MIT came after he received several messages of praise from Indian leaders and figures, including Prime Minister Narendra Modi, who tweeted on Monday, "Congratulations to Abhijit Banerjee on being conferred the 2019 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. He has made notable contributions in the field of poverty alleviation."
