Nobel Laureate economist Abhijit Banerjee has spoken out about the extreme pain India’s people are suffering after the economy took a beating from Covid.
Banerjee spoke after a recent visit to rural areas in West Bengal state.
“The stories you hear about, you know, all the aspirations that have been a little bit dashed are very real. Small aspirations which became smaller now,” Banerjee said in a virtual address to students of the Ahmedabad University in Gujarat.
“I think we are in a moment of great pain. The economy is still well below what it was in 2019. We don’t know how much below, but it is substantially below. And I am not blaming anybody, I am just saying.”
The Nobel Laureate exhorted the students to give back to society. “You are in a place where you can give back. Society really needs it. We are in a time of extreme pain in India,” he said.
He also urged the students not to succumb to pressure from family or society in choosing their career paths but to have the courage to do what they really want to do in life. Banerjee had won the Nobel Prize in Economics along with Esther Duflo and Michael Kremer in 2019.
A few days ago, the National Statistical Office said India’s gross domestic product (GDP) for the July-September quarter grew 8.4%, as against a contraction of 7.4% during the same period last year. The country’s economy had then entered into a technical recession after contracting for two consecutive quarters.
The current recovery was mainly due to an uptick in the agriculture, public administration, and defense services sectors. It has also beaten the Reserve Bank of India’s projection of a 7.9% growth rate for the second quarter.
In absolute terms, the GDP at constant prices at 35.73 trillion rupees ($475.34 billion) was 0.33% higher than the pre-pandemic levels of Q2, 2019-20, indicating that the economy has covered the lost ground due to Covid-19. Barring construction, all industry segments posted a higher output level than Q2, 2019-20.
However, the GDP in absolute terms also increased due to higher wholesale price inflation of 55.54 trillion rupees ($736 billion) in the July-September period, compared with the pre-Covid level of 49.42 trillion rupees ($655 billion).
Earlier, India’s former chief statistician and noted economist Pronab Sen had said that 8.4% growth was commendable and it was a relief that the economy had crept above pre-pandemic levels. However, Sen told the online news portal The Wire that India was facing serious problems with private consumption, micro, small and medium enterprises, and employment because it did not have easy or effective ways of tackling these problems.
Sen said small enterprises, which contribute 30% of the GDP and 80-85% of employment, are struggling and the government does not have a good and effective plan to alleviate their woes.
During the July-September quarter, private consumption, which accounts for 55% of the economy, was 19.48 trillion rupees ($258 billion) , an 8.64% rise over 17.93 trillion rupees in the same period last year. However, it still was lower than the pre-pandemic level of 20.19 trillion rupees in Q2 2019-20.