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    Abhijit Banerjee, the economist who warned India of note ban pain

    Synopsis

    Banerjee was also one of the advisors to Congress on the ambitious NYAY scheme, proposed ahead of 2019 polls.

    Banerjee and his wife Esther Duflo have jointly authored ‘Poor Economics’ to impress upon the effectiveness of solutions to global poverty using an evidence-based randomized control trial approach.
    Indian American economist Abhijit Banerjee, one of the three recipients of this year’s Nobel Prize for Economics, is firmly rooted in Indian economic policies and research, especially in the fields of microfinance and financial inclusion. He was also one of the advisors to Congress on its ambitious NYAY scheme, proposed ahead of 2019 general elections.

    Banerjee had said that should Congress-led UPA come to power, the NYAY will have to funded by new taxes given the country’s wide fiscal deficit.

    Banerjee along with Esther Duflo and Michael Kremer have jointly been awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 "for their experimental approach to alleviating global poverty."

    “The research conducted by this year’s Laureates has considerably improved our ability to fight global poverty. In just two decades, their new experiment-based approach has transformed development economics, which is now a flourishing field of research,” the Nobel Prize Committee said.

    Banerjee had also criticised India’s currency note swap programme called demonetization saying that the pain would be much greater than was initially anticipated. Many feel the current economic stress has its roots in demonetisation.

    Abhijit Banerjee, Esther Duflo, Michael Kremer win 2019 Nobel Economics Prize for study on poverty

    Indian-American Abhijit Banerjee, his wife Esther Duflo and Michael Kremer jointly won the 2019 Nobel Economics Prize on Monday "for their experimental approach to alleviating global poverty." Banerjee, 58, was educated at the University of Calcutta, Jawaharlal Nehru University and Harvard University, where he received his Ph.D in 1988. He is currently the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology, according to his profile on the MIT website.


    “First, there was the potential cost of a massive liquidity crunch, in which the volume or number of economic transactions reduces due to insufficient cash holdings. The brunt of this cost was borne by the informal sector, where 85% or more of the Indian labour force is employed, as transactions here have been traditionally carried out in cash,” Banerjee said in a paper jointly authored with Harvard University’s Namrata Kala.

    “Second, one of the stated motivations of the policy was to reduce corruption, yet the value of the highest-denomination bill was doubled, making it easier to pay people illegally with anonymity. Thus, demonetisation seemed more like a one-off penalty on those who were holding large quantities of cash at the time without affecting the future incentives for corruption,” the paper said.

    In an article published as recently as in October, Banerjee and Duflo along with Emily Breza and Cynthia Kinnan, backed India's microfinance experiment, saying that short-term access to credit allows a significantly higher proportion of talented entrepreneurs to scale up their businesses. "In sum, it appears that there are indeed sizable benefits from microfinance for some people, but it takes time for these benefits to accumulate," they argued, following a empirical study done in Hyderabad, where NBFC-MFIs were banned through an Ordinance in 2010.

    Educated at Jawaharlal Nehru University and Harvard University, where he received his Ph.D. in 1988, he founded the Abdul Latif Jameel Poverty Action Lab (J-PAL), which aims at reducing poverty by ensuring that public policy is informed by scientific and empirical evidence.

    He and Esther Duflo -- both professors of Economics at MIT and are married, have jointly authored ‘Poor Economics’ to impress upon the effectiveness of solutions to global poverty using an evidence-based randomized control trial approach.

    Michael Kremer, the other recipient of Nobel Prize in economics is a Harvard University professor.
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    67 Comments on this Story

    Gaana User414 days ago
    People are blaming demonetisation. Do the poor people stored bundles of 1000 & 500 rupees notes?
    Can anybody come out with RBI data of number of high value currency notes printed and issued from 2005-2015?
    It is quite possible RBI is lying, black and blue.
    Siddhant Kumar414 days ago
    He might be right about demonetization buy NYAY will be disastrous for the already heavy tax burden middle class of India.
    dnyanesh1234 415 days ago
    very superficial comments of so called nobel winners about demonitization
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