Nobel laureate Abhijit Banerjee said that the Indian economy is going into a tailspin and its time that the government should worry more about demand rather than monetary stability.
While addressing a press conference at the Massachusetts Institute of Technology,
“It is going into a tailspin; it 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 the economy.”
He said “the country’s economy is doing very badly even as the government has started to recognise that there’s a problem. There is an enormous fight going on in India about which data is right and the government has a particular view…all data that is inconvenient to it is wrong”.
“But, nonetheless…I think even the government is increasingly recognising that there is a problem. So, the economy is slowing very fast. How fast, we don’t know — there is this dispute about data — but I think fast,” he said.
Taking cue of National Sample Survey, which is released in every 1.5 years, he said, “…we see in that…between 2014-15 and 2017-18, that number (consumption figure) has slightly gone down. And that’s the first time such a thing has happened in many, many years. So, that’s a very glaring warning sign.”
Banerjee said, “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.”
Banerjee said he does not know exactly what to do. “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,” he added.