Hyderabad, 10 December 2020: As part of TiE Global Summit 2020, a session titled ‘Nurturing Entrepreneurship to kick start Indian Economic Growth’ was held on Wednesday night. It was a conversation of Entrepreneur and Investor Asha Jadeja Motwani with Nobel Laureate Abhijeet Banerjee.
Answering a question on India is a very poor nation and poverty is a huge problem. And why growth is needed urgently? Abhijeet Banerjee said that India has been in slowdown since 2012. Nobody disputes it, but the question is on how big it is. The biggest piece for poverty reduction had come from growth. We had done better in the 1980s & 90s in terms of poverty reduction, said Abhijeet.
According to reports, 4 to 20 million ‘good’ jobs were lost. But there was growth in ‘bad’ jobs such as jobs in construction, food delivery, etc. which played a major role. Domestic consumption led boom was driving this, he said.
There is no dearth for low-end jobs but people wait and wait for better jobs and then take these kinds of jobs. Plenty of jobs were available till recently. But these kinds of jobs are short term. These jobs need social support in terms of infrastructure. People who take up these kinds of jobs sleep under trucks, under construction buildings, etc. The skilling is low. And because they don’t have the social support, they quit after some time and go back to the villages, Abhijeet said.
Speaking on the buzz of tech such as A.I., Abhijeet said that global evidence suggests that the effect of A.I. on jobs is negative. Exposure to A.I. will create more pressure on ‘good’ jobs. It will not produce jobs. In India, if A.I. is deployed it cannot displace high end or manual labour jobs but jobs in the middle level. We have already suffered massively due to scarcity of good jobs. I don’t want to be pessimistic but right now I don’t see the pathway of integration, he said.
Speaking on the banking scenario, foreign banks can bring in capital. Involving foreign banks in the Indian banking sector but restricting it to Indian ownership is bad, he felt. It is a wrong view that Indian capitalists are somehow better than foreign capitalists, he said.
The Indian Banking sector is in a zombie state – living dead. If the books are carefully examined they are not in good health and they are in red, Abhijeet said. The pandemic forced out the government to bail out borrowers. The banks are half-dead with so much bad debt, they are not lending as they don’t have capital. This capital can come from the foreign investors in the banking sector, he opined. Another thing is our banking margins are among the highest in the world. The difference between lending rate and borrowing rate is very high, he said.
Answering a question on restriction on owning businesses in India with 51% Indian and 49% foreign investment and whether it is likely to go, Abhijeet said that he is a bit cynical about this. We are scared of competition, but faced with it we come out good. Even in 1992, there was a lot of fear in the market but we did well, he said. We can do it. When fires are lit under talent, when competition is there, we held our own. I don’t think we should be frightened, he said. It is a post-colonial mindset where we think foreign capital will be used to control us. But it has been a long time ago. If we want to handle it, we can handle it, Abhijeet said.
Answering a question from the audience on what he is working on currently, Abhijeet said that he is very interested in computer based education for the masses. Solving the problem of getting education and changing teacher attitude. The aim should be not to get answers but provoke questions, he said. I have been thinking and working on this a lot. Another thing is building skill capital, said Abjijeet.