Nobel winner Abhijit describes Indian economic state as 'shaky'
New Delhi : Abhijit Banerjee, Economics Nobel winner this year along with Esther Duflo and Michael Kremer, claimed that the current state of Indian Economy is shaky and "extremely serious".
The 58-year-old man was speaking at a function in Brown University last week where he said that the institutions are becoming zombies and investment nosediving.
Clarifying more on this he said there is a demand problem in the market and prime reasons behind decreased demand is demonetization and Goods and Services Tax, two prime things implemented by the Indian government.
"I talk to my business friends. And they say that it is impossible to invest, you don't know who is going to call you up and say that's not the right thing to do," Abhijit Banerjee said on October 9 at Watson Institute, Brown University.
"They say 'ok wait, we will check with the PMO'. PMO is busy, so nothing happens," said the renowned economist.
"Over a four year period, average consumption is going down, (which) hasn't happened in many many many many many years. And this is after being corrected for inflation. By many years, I am guessing the 70s. This is a fact that should be extremely serious," he said.
"Investment has totally collapsed by a factor of 75 per cent. Exports are not growing. I think this is a crisis. We don't call it a crisis if we want, we can say it could be a crisis, but I think we are in a crisis."
The transformation of institutions has gone from Hyperactive during Congress rule to zombies in the current situation.
"We went from the situation where we are with no institutions to having potentially better institutions which have their own challenges, to a situation where the institutions are now an extra level of bureaucratic check on the system. Institutions went from hyperactive to zombies, and zombies are the worst because now you are completely frozen in a sense... they are not doing anything particularly," he said.
'The demand problem'
Blaming note ban and GST implementation as prime reasons behind the economic slowdown, he said, "In addition, there is a demand problem. And this is a combination of demonetisation, which had a huge effect on demand and had a multiplier, GST implementation, and also in the monitory policy regime, that basically tries to pin down inflation pretty low."