GDP growth slump a worry, very serious concern: Nobel laureate

Indian-American economist Abhijit Banerjee said that the decline in Gross Domestic Product (GDP) growth rate, which slipped to 5% in the April to June quarter, was a huge concern.

“I think it is a worry, it is a very serious concern,” Banerjee told news channel CNBC-TV18.

“The general trickle down is going to slow down, partly. More importantly, one of the key channels of transmission of income from the urban growth centers to the rural places, where income isn’t directly growing so much, has come to real estate and real estate is right now in a crisis.”

Banerjee opined that a huge part of unskilled labour jobs were in real estate. “When construction goes down and brick kilns go down, the transmission of urban growth to rural areas

“In the last five-six years, at least we could witness some growth, but now that assurance is also gone"

just stops,” he added.

Banerjee said the government should conduct pilot studies and evaluate poverty alleviation policies before implementing them. He said there was a willingness in India to announce new policies because they “sound good” or have a political purpose. Asked to point out government programmes that were working without any problem, Banerjee said the Mahatma Gandhi National Rural Employment Guarantee Act was functioning well. Banerjee said MNREGA raised wages without forcing people to work bad jobs. He added that the rural roads programmes of the government had been effective as they had made it much easier for people to migrate for jobs.

The Nobel laureate said many government schoolteachers were overpaid even as only five to seven children attend these schools.

Responding to a question on poverty in India, the economist said the poverty rate was declining till at least 2012’13 but the progress slowed down by 2016. Banerjee added that he was not aware of the most recent data on poverty.