Asha Jadeja in conversation with Dr. Abhijit Banerjee

On 9 December 2020, Asha Jadeja hosted a virtual conversation as part of the TiE Global Summit 2020, a session titled ‘Nurturing Entrepreneurship to kick start Indian Economic Growth’. Nobel Laureate Abhijeet Banerjee talks about poverty and growth challenges in India answering questions on India’s poverty levels, lack of job creation and why growth is needed urgently.

In their conversation, available now on Youtube Asha Jadeja and Dr. Abhijeet Banerjee talk about poverty and growth challenges in India. According to reports, between 4 and 20 million ‘good’ jobs have been lost, replaced by growth in ‘bad’ jobs such as work in construction, food delivery, domestic service etc., Banerjee explains. He argues that a domestic consumption-led boom was driving this, and while there is no dearth of low-end jobs available, educated young people are being let down by a lack of opportunities.

Discussing the buzz around A.I., Banerjee noted that global evidence suggests that the effect of A.I. on jobs is negative. He believes that engagement with A.I. will create more pressure to create ‘good’ jobs in India.

Commenting on the banking sector, furthermore, Banerjee notes that foreign banks can bring in much needed capital, and it is wrong to view Indian capitalists as somehow ‘better than foreign capitalists’. Banerjee stresses that the Indian banking sector is in a ‘zombie state’ and that banks are ‘half-dead with so much bad debt that they are not lending as they don’t have capital’. This failure has also led to Indian banking margins being among the highest in the world. The difference between the lending rate and borrowing rate in India is ‘very high’, in his opinion.

Responding to a question on restrictions on owning businesses in India (with 51% Indian and 49% foreign investment) and whether it is likely to be relaxed, Banerjee commented that he is a bit cynical about this rule. He responded by asking: ‘Why are we are scared of competition, but faced with it we come out good?’. He notes that even in 1992, there was a lot of fear in the market but India did well. His message is that ‘We can do it!’. Banerjee believes that, ‘When fires are lit under talent, when competition is there, we held our own’, adding ‘I don’t think we should be frightened’. He further commented that, ‘it is a post-colonial mindset where we think foreign capital will be used to control us. But it has been a long time ago. If we want to handle it, we can handle it’.

Responding to a question from the audience on what he is currently working on, Banerjee said that he is: ‘…very interested in computer-based education for the masses. Solving the problem of getting education and changing teacher attitude’; is of paramount importance and, therefore, ‘the aim should be not to get answers but to provoke questions’.

About Abhijeet Banerjee

Dr. Abhijeet Banerjee is currently the Ford Foundation International Professor of Economics at Massachusetts Institute of Technology (MIT). Dr. Banerjee shared the 2019 Nobel Memorial Prize in Economic Sciences with Esther Duflo and Michael Kremer, ‘for their experimental approach to alleviating global poverty’. He and Esther Duflo, who are married, are the sixth married couple to jointly win a Nobel Prize.

Banerjee is a co-founder of Abdul Latif Jameel Poverty Action Lab (along with economists Esther Duflo and Sendhil Mullainathan). He is a research affiliate of Innovations for Poverty Action and a member of the Consortium on Financial Systems and Poverty. Banerjee was a president of the Bureau for the Research in the Economic Analysis of Development, a research associate of the National Bureau of Economic Research, a research fellow at the Centre for Economic Policy Research, an international research fellow of the Kiel Institute, fellow at the American Academy of Arts and Sciences, and a fellow at the Econometric Society. He also has been a Guggenheim Fellow and an Alfred P. Sloan Fellow. His new book, co-authored with Esther Duflo, ‘Good Economics for Hard Times’, was released in October 2019 in India by Juggernaut Books.

TiE Global Summit 2020 was hosted by their Hyderabad Chapter, and was addressed and attended by Government Agencies, Angel Investors, Venture Capitalists, PEs, Global Industry Leaders, Global Wealth Entrepreneurs, Thought Leaders, Academia, Nobel Laureates, Policy Makers, and TiE Members from Global Chapters.