From economics to politics, noted economist and Nobel laureate Abhijit Banerjee touched upon several issues concerning India at the 13th Jaipur Literature Festival. This is his advice for the government in his own words.
Banking sector crisis"Financial sector is the biggest stress point currently. The financial sector is something we should worry about, the banking sector is stressed. 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."
No confidence in economic growth"We also know that due to a demand deficit in the economy, cars and two-wheelers are not selling, and that's a sign that people lack confidence in the economy. So they are holding back and not spending."
Impact of slowdown on poverty
"Poverty alleviation has been happening mostly on the strength of the fact that the urban sector creates low skill jobs, and a lot of rural sector works in the urban sector and sends money back. That's the peak source of transmission of growth from the urban sector to the 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."
Banerjee's take on democracy
"India needs a better opposition. The opposition is the heart of democracy and the ruling party should want a better opposition to keep it under check."
Authoritarianism and economic success"You can easily argue that Singapore had a successful dictator and can easily come back and talk about Zimbabwe. We can talk about this ad nauseum... At some level, authority is an illusion."
Real issues facing govt
"They don't know where they are going, what they are getting into, I mean those are real issues the government should look into. If it wants to have more investment and more involvement in the global economy, then I think it needs to provide true data to people."
Poverty
"Poverty, like cancer, is many problems. There are many diseases. Some people are educated poor; some are health poor and some asset poor. You have to figure out what is missing. Trying to solve everything with one action is unviable and never works."
Giving the poor assets
There is so much prejudice about the abilities of the poor. Give the very poor some assets. Not lend, but give them an asset. Maybe a cow, some goats or trinkets to sell, then you look at what happens to these people after 10 years. They will be 25 per cent 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."
On being asked if he could have won the Nobel Prize in India
"I don't think so. I benefited enormously from a place (MIT) where I had the world's best potential PhD students. And that is important. All this work that I am taking credit for is mostly done by others."