Everything You Need To Know About Abhijit Banerjee || Nobel Laureate Who Warned India Against Demonetisation

Abhijit Banerjee is an Indian born American economist. He recently made history by being the second person of Indian origin to be awarded the Nobel Prize in Economics. This 2019 Nobel Memorial Prize in Economic Sciences was shared by Abhijit Banerjee, Esther Duflo and Michael Kremer for their "experimental approach to alleviating global poverty". 

He is also known for his criticism of the economic policies of Modi government especially demonetisation and he has openly talked about his concerns regarding the current economic slowdown on various platforms. 

Here is everything you need to know about him, his journey to winning the Nobel Prize and his major criticisms of the economic policies of the Modi government.

---

Quick Facts

• He was born in 1961 in Mumbai.
• He received his primary education in South Point High School, Kolkata.
• He completed his BA in economics from Presidency College, Kolkata in 1981.
• He completed his MA in economics from Jawaharlal Nehru University in 1983.
• He completed his PhD in economics from Harvard University. The subject of his doctoral thesis was "Essays in Information Economics."
• He is currently the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology,
• His work focuses on development economics which is a branch of economics that deals with economic aspects of development in low income countries.

Why did he win the Nobel Prize?

In a statement, the Nobel Prize organisation said,

“The research conducted by this year’s Laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research.”

Basically, the trio has been awarded the Nobel Prize for their contributions in helping the world to fight poverty. But they have done a lot of work in other fields as well. Mentioning all of his work is beyond the scope of this article but still some of his contributions are worth mentioning. Abhijit and his wife Duflo have worked on remedial tutoring which according to MIT has helped over 5 million children in India. Also, in 2012 he and his colleagues helped Indonesia with their Raskin scheme which provides 15 kg rice to poor families at one-fifth of the market price.

His views on Demonetisation

Many economists including Abhijit Banerjee believe that the current economic stress has it's roots in demonetisation. He says that the pain would be much greater in future than was initially anticipated.

In a paper jointly authored with Harvard University’s Namrata Kala, he said, 

“First, there was the potential cost of a massive liquidity crunch, in which the volume or number of economic transactions reduces due to insufficient cash holdings. The brunt of this cost was borne by the informal sector, where 85% or more of the Indian labour force is employed, as transactions here have been traditionally carried out in cash” 

“Second, one of the stated motivations of the policy was to reduce corruption, yet the value of the highest-denomination bill was doubled, making it easier to pay people illegally with anonymity. Thus, demonetisation seemed more like a one-off penalty on those who were holding large quantities of cash at the time without affecting the future incentives for corruption."

Basically, his criticism is based on the fact that most of the transactions in small scale businesses, MSMEs and even in more organised and larger companies were based on cash. Also, he stresses on the point that if demonetisation was aimed at reducing corruption, why was a 2000 rupee note introduced which will make it even easier to store large volumes of cash.

His views on the current economic condition of India

In a recent interview to CNBC-TV18, which you can read here, he has expressed his concerns over the slowing growth of Indian economy. He said that the economy is doing very badly citing decline in household consumption data. Adding to it, he said that the Indian economy 'going into a tailspin". He has advised the government to make policies which work and not policies which they imagine will work.

"I think there is always a little bit of a willingness in India to announce a policy because they sound good or they have a political purpose. The general message is you should carefully evaluate them, understand whether the policy works or not and take it from there. Even now I think it is not that the policies are evaluated based on accepted criteria and looked at as an option. Pradhan Mantri says it, it happens. That style of thinking is partly what we are resisting."

He also criticised the government over its ignorance of data. He said, 

"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." 

After reading all of his criticism against the policies of the BJP government, he might get a lot of hate from a certain section of thinkers but the fact is that he is a well educated economist and he knows better than most of the people who will hate him. 

Also, not to forget the fact that he has praised a lot of policies of the Indian government which he liked. He has praised Pradhan Mantri Gram Sadak Yojna as it has been effective in making it much easier for people to go where the jobs are. He has also appreciated Pranadhan Mantri Kisan scheme saying that the idea to move away from support prices towards income transfers was 'sensible'.

Some lesser known facts about Abhijit Banerjee that you probably do not know

• Both his father and mother are economists. His father Dipak Banerjee was a professor and the head of the Department of Economics at Presidency College, Kolkata and his mother Nirmala Banerjee was a professor of economics at the Centre for Studies in Social Sciences, Kolkata.
• For the last five years, the Abdul Latif Jameel Poverty Action Lab founded by Abhijit Banerjee and his wife Esther Duflo along with Sendhil Mullainathan has been involved in several policy-making studies in Tamil Nadu. Just for the record, Tamil Nadu is one of the richest states in India and has the second largest economy in India.
• His wife, Esther Duflo is the youngest person and the only woman to be awarded this prestigious award.
• Abhijit Banerjee and Esther Duflo are the sixth married couple to jointly win a Nobel Prize.
• He serves on the academic advisory board of Plaksha University, an upcoming science and technology university in India.
• While pursuing his MA in JNU, he was arrested and jailed in Tihar Jail for 10 days or so when students protested and encircled the then Vice Chancellor's office for expelling the then JNU Students Union President. He was later released on bail when the charges were dropped against the students.
• He stood first in the entrance exams of both JNU and Delhi School of Economics but decided to take admission in JNU on the advice of his parents.
• According to his mother, he likes cinema, music, cooking & walking.

What is your opinion on this matter? Please let us know in the comments! 

If you like what you just read, make sure to subscribe to our daily newsletter and our YouTube channel.

Please share this article with someone who might find this information useful.

Hi, I am Pranjay Varshney. I am pursuing my B.Sc. (Hons) in Electronic Science from University of Delhi. My dream is to join the Indian Army as an officer and I am very passionate about it. I like to write articles about Indian Armed Forces and various political and economic affairs. I spend my free time doing gymnastics, listening to music or watching movies.