Nobel laureate Abhijit Banerjee advised Finance Minister Nirmala Sitharaman to not announce any more corporate tax cuts in the upcoming Budget 2020. Banerjee and fellow Nobel laureate Esther Duflo on Friday attended an event and were part of 'The Juggernaut Dialogue' session moderated by Prannoy Roy. During the session Banerjee said that the corporate world is not short of cash.
"It needs to be understood that the corporate sector is not short of cash. Just that it is not investing. What you need to do is get the demand side going. Get the money in the hands of the people, and they will spend. This government has ensured that almost everybody has a bank account; therefore the infrastructure is in place. Several measures can be taken to arrest the downward slide of the economy," Banerjee said.
Banerjee instead emphasised on the need to have a well-oiled machinery to provide relief to the distressed. "I don't think waivers are very efficient. If a drought destroys crops, only those farmers who had taken a loan would get a waiver, for others, there is absolutely nothing. They won't get any kind of relief," he said.
He also said that it is wrong to assume that handouts to the poor made them lazy. "We have tested this theory across countries. Also, why do we always tend to blame these individuals when there are sharks all around? If the poor are given assets, for example cows and goats, and basic training to start a business, over a period of time they inculcate a confidence to stand on their feet and make ends meet. This was first tried in Bangladesh and seven other countries later," Banerjee said.
The Nobel laureate said that treating the economically backward as failures is just a very Victorian approach.
Esther Duflo said that there is a gap when it comes to research and action. "Yes, sometimes there are clashes with policymakers, but then one has to be patient. In fact, we have noticed that they too are showing more interest. Whenever a policymaker wants to implement something, we can help with staffing to ensure that he has the right people to oversee things on the ground," she said.
Banerjee also spoke about the Citizenship Amendment Act. He said, "It can be a frightening governance problem. I would be petrified if I was living in a border area. What is disturbing is the enormous power some people will have in their hands. Such decisions should not be made with a swift bill."
The Nobel laureates donated their prize money to the Weiss Fund administered by Harvard for research in development economics. The duo along with Sendhil Mullainathan co-founded the Abdul Latin Jameel Poverty Action Lab also known as J-Pal, which conducts studies in 80 countries, with the largest set-up being in India boasting of 200 staff members.