India’s economic growth may drop to 6% due to Covid-19, says Nobel laureate Abhijit Banerjee
Nobel laureate Abhijit Vinayak Banerjee, who heads the Global Advisory Board set up by the Mamata Banerjee-administration to advise the West Bengal government on pandemic issues, on Thursday said that the country’s economic growth may drop to as low as 6% due to the ongoing Covid-19 pandemic.
“The International Monetary Fund (IMF) has cut its economic growth forecast for India from 12.5% to 9.5% for the fiscal year to March 31, 2022. But I suspect it may drop to 6% to 7% at the end. I can’t give it in writing. But if another wave hits it may drop further. I hope it doesn’t happen,” he said.
The Indian-American economist, who won the 2019 Nobel Prize in Economics, along with Esther Duflo and Michael Kremer was speaking to the media at the state secretariat after attending a meeting of the GAB to discuss the impending third wave of Covid-19.
He also criticized the Narendra Modi-government at the Centre over rising fuel prices saying that the government should have been more open-handed with their spending during the pandemic.
“The Union government has a fiscal problem. The government is trying to use this one instrument it has, given the fact that other forms of tax collection are not keeping pace because economy has slowed down. It is using this to balance the budget. This a moment in which the government should have been more open handed with their spending. The Centre is too unwilling to do what the US and European countries are doing which is printing money and spending it. That would have been a better policy in the current context particularly when we are not avoiding inflation. Being less mindful of the strategy would have been the right strategy now.”
Swarup Sarkar, former regional director of WHO (World Health Organisation); Tom Frieden, ex-CDC (Center for Disease Control and Prevention of the US); Jishnu Das, economist, World Bank; and JVR Prasad Rao, a former union health secretary, were among the other experts along with senior health experts and doctors from the state.
“It will not be possible to check another wave of Covid-19 till the time 80%-90% of the citizens are vaccinated. Till then chances are high that mutant variants of the virus would continue to surface. Government figures suggest that it won’t be possible to vaccinate 80%-90% of the people before June 2022. Till then we need to continue other preventive measures,” said Sarkar, who joined the meeting virtually.
Chief Minister Mamata Banerjee on Thursday shot off a letter to Prime Minister Narendra Modi over inadequate supply of vaccines to West Bengal. She wrote that the Centre was discriminating while supplying vaccines and BJP-ruled states like Gujarat and Uttar Pradesh were getting more vaccines.
“I don’t follow the numbers (of vaccines being provided by the Centre to the states). My sense is the biggest problem is that the Centre is not capable of generating the supply of vaccines needed for the whole country. If there were enough vaccines, may be all these claims and counter claims wouldn’t arise. I think the core problem is that we have not reached the promised level of supply for the entire nation,” Abhijit Banerjee said when asked to comment on the Centre’s alleged discrimination.
He, however, lauded the state government for effectively using vaccines provided to it with negative wastage. “This is worth emphasizing. The work they are doing is excellent,” he said.
Even though the daily cases of Covid-19 dropped to 575 on Monday, the number of fresh cases shot up to 729 on Tuesday. On Wednesday, West Bengal reported 826 new cases. At least 10 people died on Wednesday. The daily count had crossed the 20,000 mark in mid-May soon after the assembly polls in the state.
On Wednesday, the Centre wrote to all states to actively consider imposing local restrictions in public observation of occasions like Muharram, Onam, Janmashtami, Ganesh Chaturthi and Durga Puja.
These occasions are lined up from August to October starting with Muharram on August 19, Janmashtami on August 30, Ganesh Chaturthi on September 10 and Durga Puja between October 5 and October 15.
The West Bengal government is planning to reopen schools and colleges, on alternate days, after the puja vacation in November, chief minister Mamata Banerjee said on Thursday after a meeting with the GAB.
Reacting to the Nobel laureate’s remark, former chief economic adviser to the Union government and currently a BJP legislator Ashok Kumar Lahiri said, “Only time will decide the GDP growth. The NSSO follows a particular model while coming up with estimates. One has to go through the details to know what is happening. I haven’t gone through it. On GDP growth I hope Abhijit Vinayak Banerjee is wrong. Even if we don’t achieve 12%, it should be around 10%,” said Lahiri.
“People ask for three things - the government should spend more, tax less and borrow less. All three cannot be done. If the government had taxed the fuel less, then one of the two things would have happened. Either expenditure had to be curtailed or the government would have had to borrow more. But there are people who say that inflation is slightly worrying. To compare India with US and European countries may not be the right thing to do. Inflation expectations are different in India, US and UK. International oil prices will not remain the same. So, there could be some relief,” said Lahiri.