Farmers' agitation less about content of farm laws, more about lack of trust: Economist Abhijit Banerjee

Nobel laureate and renowned economist Abhijit Banerjee.

Economist Abhijit Banerjee, who won the 2019 Nobel Prize for Economics, on December 10 said that the ongoing farmers' protest is less to do with the content of the contentious farm laws and more about lack of trust, ostensibly between the farmers and the government.

"This (the farm legislations) is a move at a time when states are feeling economically threatened because the economy is not delivering as much as it was earlier," Banerjee said.

Speaking about the Indian economy, Banerjee said that India is going to end the year 10 percent short from where the country was, considering the massive demand shock and low investment.

"After a 24% reduction (in June quarter), you might have imagined that you would get a 15% bounce up. We are going to end the year with 10% short of where we were. There are reasons why it would be sticky and one of them is there is a massive demand shock. Investment is very slow. People are scared and they are sitting on whatever cash they have," LiveMint quote Banerjee saying at HTLS 2020.

Exclusive | Budget 2021: Economic revival top priority; Modi govt planning public spending boost

Banerjee said that the domestic economy is not offering huge rewards. For a country like India to improve its economic bounce rate, it needs a demand bounce which hasn’t really happened. Also, he pointed that the he doesn’t know how quickly the recovery will be.

The economist was of the view that the Union government should increase fiscal stimulus to deal with the COVID-19 pandemic losses and to bring the economy back on track.

"I have always taken a view that there should be more fiscal stimulus, but the question is: How much of deficit the government is willing to run. I think the government’s primary commitment was to bail out the banks, and it couldn’t afford more than that," Hindustan Times quoted Banerjee as saying.

On the issue of loan moratorium, Banerjee said that country's policymakers, the Reserve Bank of India (RBI) in particular, had worked towards ensuring that the banks don’t collapse.

"So the loans were rescheduled and the reason why it was important was because the banking sector was already on a shaky ground. But I still don’t think the banking sector is out of the woods," The daily quoted Banerjee as saying.

Among other issues, Banerjee also spoke about COVID-19 vaccination process. According to the report, he said that Indian will require two financial quarters to vaccinate 1.4 billion people.